I was literally thinking of this too. Except I’d probably just buy him a drink. Weird? Hell yeah, but what would you do if a dude bought you a drink after you grabbed his chick’s ass? I’d be confused as fuck.
If you knew about dark pools it wouldn’t. If the market drops 20% you want your portfolio rebalanced so it comes out strong. Algorithms won’t do that, active mutual funds and having a financial advisor will. Also minimizing the down side is just as important if not more important than maximizing the up, and having a human manage money does a much better job on the down side than an algorithm does.
Active/passive doesn’t just mean YOU are actively/passively trading. An active fund is one that is managed by portfolio manages that will actively trade in and out of stocks in a mutual fund if they feel it is underperforming or there’s a better company in that sector. The S&P 500 index fund doesn’t do that. It may be good in doses to reduce cost/own the market but it isn’t managed by anyone but an algorithm. Basically an actively managed fund is an added layer of protection and human interaction that helps picking the companies inside the fund.
The best bet for you civilians isn’t index funds. The typical S&P 500 index fund right now would lead you to believe that it’s made up of the 500 companies in the S&P. This is true, but it’s what we call “market-cap weighted” which means that the largest companies basically own that fund. The revenue from the top 10 companies is just as large as the bottom 238 companies. Basically saying if you think you own the index fund for diversification, you don’t. You own Apple, Amazon, Google etc. If you must have an index fund look at smart beta funds who weight it based on % not market cap.
Cheap expense ratios? You get what you pay for. Go ahead and buy the cheapest funds but don’t expect much from it either. You can tell the 1% and above ratios to fuck off while I cash in on my 129% growth year in an international small-cap fund that killed it during 2017 (part of a diversified portfolio of course.)
Passive management has its place but active will always be the champion. Don’t worry about expense ratios too much. Above 1% is indeed high but the returns they give are sometimes through the fucking roof. No balanced or large cap growth fund is larger than 1% expense. The only 1%ers are the small cap and international small cap funds which you don’t necessarily need. They help, but are not necessary.
You’re advice on Financial advisors isn’t usually true. The big guys, yes, but there are more out there that work with folks that don’t necessarily have a ton right now but will build it as they age.
Basics: Max your 401k, but at the very least to the match if you get one. Roth-401k as well if you make too much for a regular Roth account ($118k<)
More advanced: Open a Roth and have a few mutual funds in it, ride it for the long term; you will not lose.
Even more advanced: If you make too much for a Roth, back door that bitch and make a Traditional IRA contribution and convert it to Roth money and profit (in 35 years.)
Don’t mess around with day trading. You won’t win unless you know how to trade straddles and complex options.
Advice: Open a Roth and put into the growth fund of America. You will not lose that battle over 40 years. Trailing returns of about 13.7% since inception which was about 1960. It’s not fun but neither is losing your ass because you thought you could outsmart the market/retail bank traders (hint: you can’t.)
Unless she went to Kelley at which point she’s simply asking so she can respond with a detailed discussion about how she graduated Cum Laude but barely got through M118 and K201 the first semester because “omg I couldn’t even understand my Friday morning GA and he was like 25 years old from Germany.”
Life begins at the end of your comfort zone. I’ve moved about 10 times in the last 6 years, had the family house burn down and lost all our pets and possessions, lived in 4 different cities and did it all on my own. Is it tough? Hell yeah brother. Try making new friends in a big city where you don’t know anyone, 4 times. But the growth I’ve received from those changes have shaped who I am today and I wouldn’t change any of it (wish my dogs were still alive though, but then again I wouldn’t have this new one.)
I’ve often wondered what normalcy is. For me, change has been normal. I’ve not lived in a city more than 6 months in the last 6 years. But to me that’s the new norm. Sometimes I envy those who have grown up in the same town, went off to college but then came back and there’s a sense of comfort. But then again if I did that I wouldn’t be who I am today and I look at some of those folks and am sort of sad they don’t experience the world like I have. There’s so much out there, change is good.
“Hey uh, Steve, you’re an engineer right? Yeah so can you pick up the next couple tabs? I mean, you make more than anyone here by a long shot so it’s only fair right?”
Advertise
Never punch down.
So… do go back to your alma mater? @Will
Short VIX best trade of 2018.
I was literally thinking of this too. Except I’d probably just buy him a drink. Weird? Hell yeah, but what would you do if a dude bought you a drink after you grabbed his chick’s ass? I’d be confused as fuck.
If you knew about dark pools it wouldn’t. If the market drops 20% you want your portfolio rebalanced so it comes out strong. Algorithms won’t do that, active mutual funds and having a financial advisor will. Also minimizing the down side is just as important if not more important than maximizing the up, and having a human manage money does a much better job on the down side than an algorithm does.
Active/passive doesn’t just mean YOU are actively/passively trading. An active fund is one that is managed by portfolio manages that will actively trade in and out of stocks in a mutual fund if they feel it is underperforming or there’s a better company in that sector. The S&P 500 index fund doesn’t do that. It may be good in doses to reduce cost/own the market but it isn’t managed by anyone but an algorithm. Basically an actively managed fund is an added layer of protection and human interaction that helps picking the companies inside the fund.
What about your sm./md. cap domestic and international funds? Or world bond funds? Or your emerging markets exposure?
I’m workin on it. Can’t get @dcarterruff to respond to me though.
No. See below comment.
The best bet for you civilians isn’t index funds. The typical S&P 500 index fund right now would lead you to believe that it’s made up of the 500 companies in the S&P. This is true, but it’s what we call “market-cap weighted” which means that the largest companies basically own that fund. The revenue from the top 10 companies is just as large as the bottom 238 companies. Basically saying if you think you own the index fund for diversification, you don’t. You own Apple, Amazon, Google etc. If you must have an index fund look at smart beta funds who weight it based on % not market cap.
Cheap expense ratios? You get what you pay for. Go ahead and buy the cheapest funds but don’t expect much from it either. You can tell the 1% and above ratios to fuck off while I cash in on my 129% growth year in an international small-cap fund that killed it during 2017 (part of a diversified portfolio of course.)
Passive management has its place but active will always be the champion. Don’t worry about expense ratios too much. Above 1% is indeed high but the returns they give are sometimes through the fucking roof. No balanced or large cap growth fund is larger than 1% expense. The only 1%ers are the small cap and international small cap funds which you don’t necessarily need. They help, but are not necessary.
You’re advice on Financial advisors isn’t usually true. The big guys, yes, but there are more out there that work with folks that don’t necessarily have a ton right now but will build it as they age.
Source: Financial advisor.
What would you like to know?
Basics: Max your 401k, but at the very least to the match if you get one. Roth-401k as well if you make too much for a regular Roth account ($118k<)
More advanced: Open a Roth and have a few mutual funds in it, ride it for the long term; you will not lose.
Even more advanced: If you make too much for a Roth, back door that bitch and make a Traditional IRA contribution and convert it to Roth money and profit (in 35 years.)
Don’t mess around with day trading. You won’t win unless you know how to trade straddles and complex options.
Advice: Open a Roth and put into the growth fund of America. You will not lose that battle over 40 years. Trailing returns of about 13.7% since inception which was about 1960. It’s not fun but neither is losing your ass because you thought you could outsmart the market/retail bank traders (hint: you can’t.)
Name checks out.
Unless she went to Kelley at which point she’s simply asking so she can respond with a detailed discussion about how she graduated Cum Laude but barely got through M118 and K201 the first semester because “omg I couldn’t even understand my Friday morning GA and he was like 25 years old from Germany.”
Life begins at the end of your comfort zone. I’ve moved about 10 times in the last 6 years, had the family house burn down and lost all our pets and possessions, lived in 4 different cities and did it all on my own. Is it tough? Hell yeah brother. Try making new friends in a big city where you don’t know anyone, 4 times. But the growth I’ve received from those changes have shaped who I am today and I wouldn’t change any of it (wish my dogs were still alive though, but then again I wouldn’t have this new one.)
I’ve often wondered what normalcy is. For me, change has been normal. I’ve not lived in a city more than 6 months in the last 6 years. But to me that’s the new norm. Sometimes I envy those who have grown up in the same town, went off to college but then came back and there’s a sense of comfort. But then again if I did that I wouldn’t be who I am today and I look at some of those folks and am sort of sad they don’t experience the world like I have. There’s so much out there, change is good.
Sorry for the long-winded selfish post.
Tl;dr: Change is good, embrace it.
Yeah they should find an FA. WINK WINK.
I wonder if PGP would like, you know, start a column written by someone who’s say, a financial advisor or something. Wink wink.
“Hey uh, Steve, you’re an engineer right? Yeah so can you pick up the next couple tabs? I mean, you make more than anyone here by a long shot so it’s only fair right?”
Looking forward to your segment on the TB podcast regarding your stay here, Will!