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Boris Marjanovic  

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  • The No. 1 Stock In The World - Part 2 [View article]

    "The only millionaire that I know got to be rich by investing in stocks. He never bought a single ETF or fund, he just picked individual stocks. His biggest holding for many years was XOM. He has owned stock in XOM for 50 years and will be dead before they ever go out of business."

    I know a lot of people who went bust using that same exact strategy. In this case, the main difference between the millionaire and the broke bum is dumb luck. On one hand, putting all of your eggs in one basket can make you rich (which automatically makes you look smart); on the other, it can put you in the poor house (which automatically makes you look stupid). Both individuals use the same strategy, one just happens to win the lottery. People tend to focus on the lucky winner, and completely ignore the unlucky loser. It's amazing to me how ignorant people are when it comes to things like this (even those on Seeking Alpha who are supposed to know better).

    Perhaps "the only millionaire" you know who got rich that way was the extremely lucky one! Ever think about that? If your concentrated investing strategy worked so well then perhaps you would know "more than one" millionaire! I know a lottery winner, too . . . but just like you, I only know of one (winning the lottery is not that common apparently -- it takes a lot of luck).
    May 28, 2015. 10:08 PM | 3 Likes Like |Link to Comment
  • The No. 1 Stock In The World - Part 2 [View article]
    Some of those companies might not even be around in 10 years. There is one universal fact -- every company that has ever existed and ever will exist has or will eventually go bankrupt (or, at best, close down operations). In life, nothing lasts forever. So putting all your money in one stock -- even a good stock -- for ten years is not wise. If I was forced to only buy one thing and hold it for a very long time, the safest option would be to buy an ETF (or index fund) that tracks the market.
    May 28, 2015. 08:47 PM | Likes Like |Link to Comment
  • Price-To-Earnings Is An Inferior Measure Of Value [View article]
    "The strategy does not buy a cheap stock and hold it forever - that is one of the common mistakes committed by Buffett wannabes."

    Holding a stock forever is not intelligent investing. Stocks are there to make you money. They're not your friends. You own them when they're cheap, sell them when they get expensive. I agree with you that a rules-based, systematic investment strategy is the way to go. This talk about "holding good companies forever" is complete nonsense . . . even Buffett doesn't do that. Almost every stock he bought during his long investing career he eventually sold . . . so much for holding stocks forever! Buffett is a smart guy and we can learn a lot from him, but some people take his words too literally.
    May 28, 2015. 08:33 PM | 3 Likes Like |Link to Comment
  • A Simple Value Strategy That Kills The S&P 500 [View article]
    This strategy can be made even simpler and better. First, quarterly rebalancing for strategies such as the one described above is not necessary. Annual rebalancing works just as well, and often times even better, because of lower trading costs and taxes. And second, instead of using "price" in the numerator of PTBV, using "enterprise value" would work better. EVTBV has been shown to provide slightly better risk adjusted returns in the long run. Hope that adds some value to this discussion.
    May 28, 2015. 08:18 PM | 3 Likes Like |Link to Comment
  • How Not To Beat The Market [View article]

    Try the barbell strategy I described in the article, it will be perfect for you.
    May 20, 2015. 12:51 PM | 1 Like Like |Link to Comment
  • How Not To Beat The Market [View article]

    Glad you enjoyed the article!
    May 20, 2015. 10:27 AM | 2 Likes Like |Link to Comment
  • How Not To Beat The Market [View article]
    "I know from my experience I have exhibited most of these at some time."

    Wish I could say I never made these mistakes but it would be a lie. But I definitely have learned from my mistakes (which is what matters).
    May 20, 2015. 10:26 AM | 1 Like Like |Link to Comment
  • How Not To Beat The Market [View article]

    I agree, the equally weighted RSP is much better than the cap-weighted SPY. I just used SPY (and the real S&P 500 index) as an example since there is data on it going back many decades. Actually, in this article I mention the benefits of buying the RSP:
    May 20, 2015. 10:21 AM | 2 Likes Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]
    "After having played this game for 15 years, I've learned that the best investment strategy is just to keep it simple and automated. Have a few basic criteria you look at to make a decision and then just diversify. The less research the better, as most of the information out there is meaningless."

    Completely agree. Most information about companies is just meaningless noise. It's really only a couple of variables that matter (e.g., valuation) and it's easy to automate this process to look for such stocks.
    May 6, 2015. 12:58 PM | Likes Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]
    Read my comment above. Over the long-term the S&P has outperformed.
    May 5, 2015. 02:39 PM | Likes Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]
    "Winner: the market-cap weighted, less volatile, higher returning VUG."

    You need to stop posting false facts, my friend. First of all, we must compare ETFs with the same composition of I did with the S&P 500 ETFs. Sure, you can find a completely different ETF that had higher returns but it's like comparing apples and oranges -- makes no sense!

    Second, the VUG returned a cumulative total of 152% since it was introduced in January of 2004; the RSP returned, over this same time period, 179%. These numbers include dividends. Although I don't think we should be comparing these two ETFs with each other in this case, the evidence is still clear -- RPS comes out on top.

    And the final point I want to make relates to your false belief that equal weighting is more risky. You define risk, as a lot of finance academics do, as standard deviation (i.e., volatility). Anyone who, like myself, spent his life trying to understand risk knows that volatility is an awful proxy for risk. But let's go with it for now. Since inception, the VUGs Sharpe Ratio (i.e., risk adjusted return) was 0.40; RSPs Sharpe Ratio is 0.42. It looks like, even based on your own criteria, the RSP wins again.

    Next time back up your comments with real statistics if you want people to take you seriously.
    May 5, 2015. 02:24 PM | 2 Likes Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]

    You're correct, people are missing the point of the article.
    May 3, 2015. 12:31 PM | Likes Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]
    "It even concluded that if you created an S&P index and just left out the 10 stocks that were the largest of each sector, that you could outperform the "market" by 1% per year, on average, because the largest stock in each sector was so large."

    This is a very interesting point. Perhaps it's one reason why the equally-weighted S&P 500 outperforms the cap-weighted one -- because it owns less of the mega-cap stocks.
    May 2, 2015. 12:59 PM | Likes Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]
    "And to finish it off: Do you really think Buffett is a equal weighing guy, or does he just buy high quality stock and keeps them "forever" (no rebalancing)?"

    Most of the stocks Buffett has ever owned he sold. You don't hold anything forever because "forever" is a pretty long time and things can change and technology evolves. Eventually all companies, and I mean ALL companies go bankrupt (or at the very best are forced to close down). Even Apple and Google and Amazon will one day cease to exist.

    Buffett is a pretty smart guy, but just because he does something one way doesn't mean it's the right way (he could have just gotten lucky). George Soros became very rich trading stock based on nothing more than how much his back was hurting that day. No joke, he used back pain as an indicator of whether or not he made a good investment decision. He is also a smart guy just like Buffett. Does that mean we should sell stocks or rebalance our portfolios whenever we feel pain? I don't think so!
    May 1, 2015. 01:11 PM | 1 Like Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]

    "Equal weight rebalancing also requires buying more of Enron on the way to zero."

    This statement is false. Given the fact that Enron was a large-cap company, it would have represented a very large percentage in a cap-weighted index such as the S&P 500 (1-2% I estimate). In an equally weighted index the weight would only be 0.20% -- in other words, with the equally weighted index you wouldn't even notice if Enron went to zero (but you would with the cap-weighted one). Also, it's important to mention that stocks like Enron get removed from the index when their market caps drop below a certain level, so the equally-weighted index wouldnt even be buying all the way down.
    May 1, 2015. 10:59 AM | 1 Like Like |Link to Comment