Choosing one thing that's done well historically and suggesting you put all your money in that in the future... is the purest definition of cherry picking I've ever seen.
GAT
Another year of hedge funds not earning their keep
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Choosing one thing that's done well historically and suggesting you put all your money in that in the future... is the purest definition of cherry picking I've ever seen.
GAT
Then aren’t we all cherry picking? Don’t you go with the best performing funds or index or trading system or whatever?
What makes it legit is the fundamentals. If you believe in America the most robust economy and technology where most of the productivity comes from then qqq becomes the logical choice
Cherry picking is starting from the 2000 peak. Taking the entire life or starting from a random point is not.
Definitely not. I go with a highly diversified portfolio of shares/funds/indices/trading systems. Anyone who puts all their eggs in one basket is taking a massive gamble.
GAT
A 16 years stretch is not cherry picking!
It's more than a full economic cycle. QQQ was shit during 16 years. Many investors can't afford to wait 16 years to just get back their capital and many other assets/HF whatever performed much better.
BRK had a better and much more regular performance from nearly any period you study.
Investing in QQQ in 2009 would have given you a really amazing performance even more with TQQQ. But it's easy to say now that we have the data. QQQ was hated and beaten down by almost everything before that.
One another example, TQQQ completely crushed QQQ since it was created
Perfect! Then you can compare TQQQ for the "entire life" of this ETF and you will see that it performed much much better than QQQ!
You chose a one sector concentrated index that performed very well those last 10 years and not before. And you're hoping that this sector will continuously beat all the rest.
Based on past data, we can find so many etf that overperformed others for a certain period, especially if those are very concentrated.
But! The more concentrated they are, the more risks they have to diverge in the future from their past performance!
by your definition its' also cherry picking as 'diversification' appears to have lower risk in the past.
it's also conventional wisdom that is quite dangerous at the current environment... due to yield chasing bonds valuation have been distorted... the financial advisors out there who don't know any better probably are telling their clients to diversify, which is actually bad advice currently.
'massive gamble' is really a perception... it's gamble for you but not for me... so who is correct? that's why we have the market to settle the scores.
The lower risk of diversification is a mathematical fact*, nothing to do with what has happened historically.
* Unless all correlations go to exactly one and stay there permanently
It's a massive gamble unless you have a super human ability to forecast future returns. If you don't then, in expectation, a diversified portfolio will have a higher Sharpe Ratio than a non diversified one.
GAT
ok, so I am saying I have a super human ability, and my account balance proves that.. what I meant by 'settling the score' lol.... slightly off topic.. but case in point, it's silly to add an inferior product like HF in the portfolio for the sake of diversification.
sharp ratio and all, that's all book theory... reality is very different.. you gotta look at all the players and what they think and do.... e.g. in recent years due to yield chasing and 'forced buy' from pension funds and retirees the bonds have been chased to insane levels... and due to the preference of real estate from the Asian money that sector has been chased up as well, right now the only 'hated asset' is stocks.... these things they don't teach in text books.
general statement of course... at the end of the day it still gets down to the wisdom of the individual investor or adviser... isn't that why we are all here... thinking we are smarter than the other guys..
if you have time to kill pls check my thread 'trading is easy'.... to me it's crystal clear what is going on... call it superhuman or not..