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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (54668)	1/1/2015 1:58:07 PM
From: MCsweet	Read Replies (1) \| Respond to of 78615

Jurgis, I hope you aren't serious about quitting investing. You do a thorough analysis, and I always appreciate your insights, so I think it would be a mistake to call it quits based on one year's worth of results. Note that IWM underperformed as well and any stock smaller-microcap corresponds closer to that one. MC

To: Jurgis Bekepuris who wrote (54668)	1/1/2015 3:41:45 PM
From: Grommit	Read Replies (2) \| Respond to of 78615

I may have posted this link before. Here's a few clips. How much investment income (or gains) can you rely on? Is it enough? Yes or no? If "no", keep working. If "yes", invest sanely and ignore benchmarks. That's it. In my case, I can live off my dividends, so cap gain is irrelevant. (But I still expect cap gains based on economic growth of my companies' profits.) My performance vs index is irrelevant, just a curiosity. But if you need cap gains to live, or to retire, then you are in a different boat. And if you need investment home runs, you are in trouble. For stock pickers -- I am certain that picking the correct sector is more important than picking the best stock. I am sure energy inventors would agree today. ################# The first is part of the debate over skill versus luck in investing. Investors generally seek returns that beat a benchmark, known as alpha in financial jargon. But the reality is that alpha barely exists today — at least alpha that is achieved through skill and not luck....The solution to the mostly futile quest for alpha, though, is not to switch to being a passive investor alone...Investors want to invest with a long time horizon yet react to short-term swings that derail the strategy.. NYT wishing someone investing "good"luck" is very appropriate. :o)

To: Jurgis Bekepuris who wrote (54668)	1/2/2015 12:51:00 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78615

Not sure about passive investing. Does it mean investing in one particular index of your choosing and not devoting much time, if any, to individual stock selection? Or does it mean investing in several indices (S&P/small cap/value/foreign/etc.) and not much time for individual stock selection? As I understand it, Mr. Buffett, in his will, has advised his wife to invest primarily in the S&P 500? At this point, with the S&P at record highs, that seems to me could either be dangerous if the person was striving to increase portfolio worth (i.e. not Mrs. Buffett), or might require a multi-year commitment (if the S&P declines and then eventually recovers). It also seems to me that a decision to invest in two or more indices is an active decision where one must acknowledge that he/she will have years where one index excels and other years where a different index does. (And at some point the rebalance or not issue is an active decision.) With this, I presume the person believes the overall returns may not beat any index but otoh that the risk of loss may be reduced (by holding different indices) and the overall portfolio increases over time. An achievable goal here would be to have a portfolio that will grow enough to meet the person's financial goals -- if, as the article, says, people would focus on setting a financial goal and meeting it, and not on short-term performance of stocks or an index. ===== "Only 29 percent of investors defined investing success as reaching their long-term goals; most preferred short-term markers, like their portfolio’s return versus that of a benchmark. Another disconnect revolves around time. Investors want to invest with a long time horizon yet react to short-term swings that derail the strategy. Think of investment return markers, like one, three and five years — hardly the time needed to get people from their first job to retirement."