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

To: Paul Senior who wrote (54679)	1/2/2015 2:04:29 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78615

An achievable goal here would be to have a portfolio that will grow enough to meet the person's financial goals This might work for some people, but overall I think this is rather nebulous. Where it could work easily: let's say Mr. X has a financial goal that requires 3% annualized return for 10 years. OK, buy 10 year treasuries, or at worst munis and you are set. What if Mrs. Y needs 5%? OK, this is more questionable, but perhaps you can argue that stocks on average return 7% a year, so you do 60%/40% stock/bond portfolio and call it done. BTW, there is still no guarantee, but possibly a reasonable chance. What if Ms. Z needs 8%? (Like those "fully funded" pensions we hear about ;)))). Now we are in trouble. Average stock market returns are 7% (or something), so there's no way in heck Ms. Z is getting her z's... Well, maybe with some leverage and small cap index or something... no, not really. In practice though, if Ms. Z learns how to invest and is a better investor than Mr. Jurgis... oh, heck even Mr. Jurgis made 8% per year for last 10+ years. ;) But Ms. Z will never know beforehand that her portfolio is set to "grow enough to meet the person's financial goals". That's why this expression is nebulous. :) If I went with this expression, I'd like to have long term return of 10% annualized please. :) Do you really think the authors of the article have a suggestion that would fit my "financial goals"? ;) 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? These are very reasonable questions. I don't have answers right now. As I said, this is a work in progress. It might be that the solution is a portfolio of BRK/FRFHF in hold-forever mode. That would be "one particular index" or actually more like two mutual funds disguised as two stocks. :) Note that I did not say that I will switch to index, I just said the vague "passive" adjective :)). The goal would be: remove most of the investment decisions from me (though perhaps loading them onto someone else), ... , profit. :) Couple other alternatives: - mechanical "magic formula" screen - one or more mutual funds/hedge funds/ETFs - some set of index funds (possibly RSP or PRF)