If there is no compounding and a limit, what’s the point.
With 1M invested, you get a nice 400k per year (that you can then invest in a low cost index fund for example).
Also they managed to make it part of their pension plan, so all that income is tax free…
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Many asset classes don’t compound. Gold doesn’t compound, real estate doesn’t compound, bonds don’t compound (without active reinvestment) etc. What’s the point of all that to you?
I’m 100% into stocks.
I have a feeling, right now you’re just trying to stay negative just for the sake of it. If you could invest $1 million in an investment which returns 66% every year, wouldn’t you? You seriously don’t see the point? The point is, you take this money and invest it elsewhere, or spend it, 66% is an incredibly good return.
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You do know that stocks represent businesses, and that the economics of the business will never compound to the sky? For any company, there is always a point where putting up more capital does not equal more profits.
It is the case with Rentech, and it is also the case with a huge proportion of the companies contained in your beloved ETFs.
The difference being that Rentech is a superb business creating a perpetual annuity of $4 billion for its owners, after fees. You don’t find a lot of businesses returning 40% on invested capital…
Ok, as just about everyone is having an argument and getting nowhere, wishing I hadn’t bothered starting thread, will turn off notifications and leave you too it!
Well, for the entire economy (or big index that represents it), it’s more likely that external factors will lower returns - like demographics, trade wars, normal wars, etc. It’s unlikely that people will just stop consume products and services from private companies because they will turn into hippies. If we’ll meet that situation in our lifetimes we’re gonna be screwed anyways - not only with our investments. Besides, one can diversify into real hard assets (real estate, gold, rare stamps, ammunition, etc) for doom scenarios.
FYI a recent article on the fund: https://www.institutionalinvestor.com/article/b1k2fymby99nj0/Famed-Medallion-Fund-Stretches-Explanation-to-the-Limit-Professor-Claims (it quotes Zuckerman)
All these arguings are just upon shorttermism. I wroete it at another threth too.
As Simon Edelsten of Artemis Global Select fund put it, “Buying and selling shares on the basis of valuation seems suddenly to have become unfashionable”. Expecting the current party to continue ‘to infinity and beyond’ is a pie in the sky dream as the market tends to move in cycles where the dominance of greed is followed by the era of fear. This time will be no different.
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do you think that investors who are buying the index that is full of overvalued names have decent downside protection ?
With the Shiller PE ratio above 31
More likely than not, mean reversion will work its magic again, and I certainly don’t want to be caught with a stock portfolio full of garbage.
Howard Marks says, “The more enthusiasm there is in the world, the harder it is to live up to people’s expectations and the easier it is to disappoint. When a stock goes from great optimism to the optimism sobering up, it’s very painful for investors.
What you really want to know is how much optimism is in the price. How much optimism do you think is baked into that 30+ Shiller PE?
It is very difficult to follow a value approach unless you have sufficient confidence in it.
Outperforming or underperforming a market index is not something that bothers me on a daily basis. Ben Graham’s lines echo in my head: “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioural discipline that are likely to get you where you want to go.”
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Good luck with leaving out the “garbage” in your portfolio.
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Buying top-quality stocks at reasonable valuations is a defensive strategy and it does show in the results at a time when the market goes down. And usually does not outperform at the time of overvalued market.
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By the way, is there anyone who has enough courage to admit that he/she is stock picker? You know, just like Fallschfahrer on the Autobahn 
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Any literature that suggests that this is possible?
The reasonable way to achieve this is to hold bonds as a portion of your portfolio.
You want me to give a proof of evidence in written, otherwise it did not happen, did it?
The topic here is the stock picking vs ETF. IMO this is a wrong approach. I said the same regarding renting a buying property.
I hardly ever check my personal portfolio’s performance compared to market indices. What I do care about are my predictable and growing dividends that support my lifestyle with a huge built-in margin of safety and the feelings that I have about investing. These two have a major influence on the quality of my life.
Outperforming or underperforming a market index is not something that bothers me on a daily basis.
As a result, how can I give you anything what will show you the way I feel?
First, you must know where you want to go. Know what’s important to you and build your plan around those things. Dividends and peace of mind come first for me, all the rest is secondary. The biggest mistake most people make in the planning phase is that they ignore the psychological side of investing.
Once you are humble enough to listen to your feelings in the planning phase the discipline will come easier in the execution phase since you have a tailor-made plan that fits you perfectly.
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For me to learn, why dividend is so important? What is the difference between 2% dividend vs 2% increase in stock price? Plus we pay extra tax on dividends vs stock price increase. I am not sure about source but I thought index investing still provides better total returns vs stock picking…
I guess your goal is to pay more taxes and reduce volatility with lower but more stable returns? and hence you get a better feeling with it. Which is good, I guess 100% bond portfolio holders also have the same approach.
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If the company pays a dividend, stock price will decrease by the amount of the dividend. For a investor it makes often better if the company does a buyback of their shares.
Dividend paying stocks have usually higher exposure to the value factor and thus a higher expected return. However you can invest in etfs with value exposure without limiting yourself to companies that do only pay dividends.
Here is a good video that explains this:
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Well well, this is not exactly the case but fancy videos convince a large audience about it 
and for now it seems to be the holy grail of watching anyway professionally made videos about near to anything and xorfish likes to spam with those
Well, well, can you provide some arguments and sources? Or you can just talk?
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