Buy and Hold SP500 Not A Good Idea Afterall....
- Thread starter libertad
- Start date
IMO passive investing is intrinsically flawed because it totally ignores value. If the S&P was at a P/E of 100 then passive stock investing says stay 100% long stocks. That is totally insane.
I think all investing must have some valuation metrics behind it.
In addition, it's crazy to allocate 100% to stocks because of the level of risk. Virtually all major markets have at some point fallen 75%, sometimes even more (e.g. Japan, USA). The risk of losing 75%-90% of life savings accumulated over decades is way too high. Therefore all passive investing must have diversification between different asset classes, based on your risk tolerance and age.
So IMO the best passive investing approach is split between the main assets - stocks, bonds, real estate, cash, commodities - and incorporates some valuation input so you steadily cash out and reduce or even eliminate exposure once any market gets absurdly overvalued, and reallocate to undervalued assets. This inherently requires some active input.
The people who followed John Bogle are sheep who have had their hides shorn.
I think all investing must have some valuation metrics behind it.
In addition, it's crazy to allocate 100% to stocks because of the level of risk. Virtually all major markets have at some point fallen 75%, sometimes even more (e.g. Japan, USA). The risk of losing 75%-90% of life savings accumulated over decades is way too high. Therefore all passive investing must have diversification between different asset classes, based on your risk tolerance and age.
So IMO the best passive investing approach is split between the main assets - stocks, bonds, real estate, cash, commodities - and incorporates some valuation input so you steadily cash out and reduce or even eliminate exposure once any market gets absurdly overvalued, and reallocate to undervalued assets. This inherently requires some active input.
The people who followed John Bogle are sheep who have had their hides shorn.
This has to be the funniest thing I've read all day - that it's a form of prejudice to disagree with the thesis that gold is a worthwhile investment.
The point being, once upon a time before the advent of modern international finance, gold is a universal medium of trade. Even if your country collapse, if you got gold, you can use to buy stuff somewhere across the world.
This is no longer true today. There are plenty of other mediums of international exchange. Gold has no fundamental value. Why, other than historic convention, should gold be the "safe medium"? Wouldn't anything fairly rare and compact do the trick?
Goldbugs have a very superficial understanding of finance.
The point being, once upon a time before the advent of modern international finance, gold is a universal medium of trade. Even if your country collapse, if you got gold, you can use to buy stuff somewhere across the world.
This is no longer true today. There are plenty of other mediums of international exchange. Gold has no fundamental value. Why, other than historic convention, should gold be the "safe medium"? Wouldn't anything fairly rare and compact do the trick?
Goldbugs have a very superficial understanding of finance.
One flaw in your reasoning. Historically the best returns in stocks come from being long during those "over valued" times. Most people left to their devices would sell something as soon as it revalues higher and then miss the meat of the move.
Plus no two assets even within a class need be alike. In 1960 homes in suburban Detroit sold at higher prices than Beverly Hills. Hence a proactive trader by 1970 might have said, "I'm selling Beverly Hills it's too rich vs. Detroit. These gains are unsustainable." The Detroit guy would have stayed long thinking "this stuff is under valued compared to the way L.A. is rocking." Sometimes blindly holding is death other times it's gold....
Plus no two assets even within a class need be alike. In 1960 homes in suburban Detroit sold at higher prices than Beverly Hills. Hence a proactive trader by 1970 might have said, "I'm selling Beverly Hills it's too rich vs. Detroit. These gains are unsustainable." The Detroit guy would have stayed long thinking "this stuff is under valued compared to the way L.A. is rocking." Sometimes blindly holding is death other times it's gold....
Sorry - did I miss a rebuutal of some sort in your sarcasm that I missed?
If your point is that gold is valuable as a hedge because it has market value, then I think your analysis is flawed. Clearly, there's a market for gold today. but that isn't the thrust of your point is it? You are arguing that gold has some value as a hedge against some dire macro outcome. My point is that it doesn't because there's no fundamental reason why gold should retain its value when all else fails.
My point does not preclude that gold is trading today.
(if I had gold, and you offer me a few worthwhile ticks above market, it's yours. I don't believe there's any special value to gold beyond its market value)
If your point is that gold is valuable as a hedge because it has market value, then I think your analysis is flawed. Clearly, there's a market for gold today. but that isn't the thrust of your point is it? You are arguing that gold has some value as a hedge against some dire macro outcome. My point is that it doesn't because there's no fundamental reason why gold should retain its value when all else fails.
My point does not preclude that gold is trading today.
(if I had gold, and you offer me a few worthwhile ticks above market, it's yours. I don't believe there's any special value to gold beyond its market value)
Quote from GCSICLRBC:
I'll lay down & concede. You're brilliant. If you're not a CTA by now you should be. Millions in allocations will flow your way soon!
Because gold has no fundamental value, maybe I'll bid on yours.
$500 CASH VIA PAYPAL TODAY.
PM ME. I'm serious. I buy. =)
--Harold
Exactly. Goldbugs for some reason believe that gold occupies a special place as a "rightful" form of money. I think it's because they don't what "money" is. Beyond all else, if something can be used a unit of storage of the ability to exchange, it is a form of money.
To wit, when cigarettes fell out of favor as the currency of prisons, tin cans of fish became the main form of money. It's compact, costs approximately a dollar, and has no value beyond a medium of exchange.
All money is fiat, gold included.
To wit, when cigarettes fell out of favor as the currency of prisons, tin cans of fish became the main form of money. It's compact, costs approximately a dollar, and has no value beyond a medium of exchange.
All money is fiat, gold included.