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Boris Marjanovic  

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  • Beating The Market Is Simple, But Not Easy [View article]
    "The reason RSP has outperformed over the last 5 years is because small-caps have outperformed over the last 5 years."

    The RSP has outperformed for a lot longer than 5 years -- in fact, since it was introduced in early 2003 (which is more than a decade!).
    May 1, 2015. 10:51 AM | 1 Like Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]
    "Equal Weighing is dumb, as you pile on stocks that perform badly just to keep their weight constant, while you constantly are selling winners to keep their weight constant as well."

    If outperforming the market through equal weighting is dumb, then I don't want to be (your version) of smart!

    Equal weighting is more robust and there are many mathematical reasons why that is so, but it's too complicated to get into here. As I explained earlier, equal weighting is a contrarian strategy. As you rebalance it systematically forces you to buy the losers (i.e., the hated stocks) and sell the winners (i.e., the loved stocks). This, of course, goes against our natural human instincts. If you want to beat the market you must do things differently from the market, and that's why equal weighting works so well.
    May 1, 2015. 10:46 AM | 1 Like Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]
    s-belton12

    You're comparing different indexes/ETFs to each other and it makes no sense in this case. Equally weighted versions of the ETF's you mentioned would perform even better over time than the currently cap-weighted ones. I have actually done a study on this and will publish it soon.
    Apr 30, 2015. 09:46 PM | 2 Likes Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]
    s_belton12,

    I would pick the equal weight version. And your comment proves my point -- equal weighting forces you to buy more of those stocks that are hated (in this case BBRY) and less of those that are loved (in this case AAPL). This contrarian strategy is why the equally weighted S&P is outperforming the cap-weighted one.

    For the sake of argument, let's say we were having this argument a decade ago when BBRY was on top of the world and performing very well. I guarantee you would give the exact opposite argument -- buy more BBRY and less AAPL. Or what if we were talking about AAPL in the 90s? Remember, back during the 90s AAPL was struggling. It was essentially in the same position BBRY is in today. As the saying goes, hindsight is always 20/20. But when it comes to making money it's the future that matters, not the past!

    The beauty of equal weighting is that it doesn't require you to make predictions. Each stock is weighted equally in the index/portfolio -- some will do well, some poorly -- but on average your overall portfolio will do pretty good.
    Apr 30, 2015. 10:38 AM | 8 Likes Like |Link to Comment
  • Preparing For The Market's Collapse [View article]
    mts,

    I don't mean to sound arrogant, but it's pretty obvious that you don't even have a basic understanding of small probability black swan-style events. Let's just say the math can get quite complicated.
    Apr 28, 2015. 12:14 AM | 1 Like Like |Link to Comment
  • Preparing For The Market's Collapse [View article]
    mts,

    "It's 19x worse. To return from a 5% drawdown, you need a 5.26% increase. To return from a 50% drawdown, you need a 100% increase. 100%/5.26% = 19."

    I am afraid to say that nonlinearities/scale effects don't work that way; in other words, the math is not that simple. Experienced option traders will know what I mean.
    Apr 27, 2015. 11:29 PM | 1 Like Like |Link to Comment
  • Preparing For The Market's Collapse [View article]
    "In many ways, 5% market corrections are substantively different than one tenth 50% moves."

    I get what you're trying to say (the harm is not linear), but it's kind of poorly worded. In your example, a 5% move and 1/10 of a 50% move are, in fact, the same exact thing! What you should have said is that a 50% correction is not 10x as bad as a 5% move -- it's a lot worse than that, maybe 100x worse or more. There is a huge difference here.
    Apr 27, 2015. 10:08 PM | 4 Likes Like |Link to Comment
  • Don't Be Fooled By Stock Market Noise [View article]
    Jerbear,

    I agree with you 100%. I would also like to add that Buffett has started underperforming the market over the last 10-15 years. He can't provide the same returns he once could anymore because the amount of capital he is managing has grown too large.
    Apr 21, 2015. 10:41 AM | 1 Like Like |Link to Comment
  • Don't Be Fooled By Stock Market Noise [View article]
    "Investors don't have to be Buffett or soros. Just invest in them."

    Finding another lucky Buffett or Soros is harder than finding a microscopic needle in a huge haystack. I wish you the best of luck in your search......you will definitely need it!
    Apr 20, 2015. 10:25 AM | 1 Like Like |Link to Comment
  • Don't Be Fooled By Stock Market Noise [View article]
    Junji,

    "When market is going time the indexing herd always roar but theory always turn out indexing investors who knows long term indexing will out perform 85% investment managers but the question is how many indexing investors became wealthy like Buffett shareholders."

    Investing - like casino gambling - is largely a game of luck. Given that there are literally tens of millions of investors in the world, it is a statistical certainty that a very tiny percentage of them will become a Warren Buffett or a George Soros. Likewise, if there were an equal number of coin-flippers, a few would, by pure chance alone, flip heads 20 or more times in a row - it does not prove that they are skilled coin-flippers.
    Apr 19, 2015. 02:42 PM | 1 Like Like |Link to Comment
  • Don't Be Fooled By Stock Market Noise [View article]
    MAYHAWK,

    I don't think he knows that. Literally decades of empirical research has been done on this topic, and the evidence is clear: most investment pros underperform simple index funds over time.
    Apr 17, 2015. 12:34 PM | 2 Likes Like |Link to Comment
  • Don't Be Fooled By Stock Market Noise [View article]
    junji_0214@hotmail.com,

    "The buy and hold game should be over if it is easy just buy and hold why we need investments professionals."

    "The investments community would not hire the pros to sort out so many info may or may not relevant to us."

    The fact that it's easy is what makes it so difficult! People overcomplicate things, believing - as you do - that the more complicated you make investing, the higher your returns will be. Unfortunately, this is simply wrong, and decades of empirical evidence overwhelmingly confirm this.

    Most fund managers (the so-called "pros") underperform simple index funds. Why don't they just buy simple index funds then, you ask? Well, then they wouldn't be able to charge the high fees they charge now. Simply put, the majority of pros aren't that good when it comes to investing...they mostly trade the random noise (and it shows when you look at their terrible track records).
    Apr 16, 2015. 09:21 PM | 5 Likes Like |Link to Comment
  • Don't Be Fooled By Stock Market Noise [View article]
    eastmanair,

    I agree, there is a lot of articles published on SA, but most are nothing more than noise. I mean just look at a stock like Apple (AAPL). On SA alone, there are dozens of articles published about the company every week. The authors are focusing on the most minute details about the company and completely miss the big picture (i.e., the signal). If they were only focusing on the meaningful things, you would get - at the most - a couple of Apple articles per year. This is just one example, but there are countless others.
    Apr 16, 2015. 11:15 AM | 4 Likes Like |Link to Comment
  • This Stock Market Bubble Will Burst Like An Overinflated Balloon [View article]
    Noah,

    I literally said it's impossible to know when it will occur. I simply pointed out that there is a bubble in the market and how to protect your profits when it pops (which is the purpose of this article).
    Apr 7, 2015. 05:14 PM | Likes Like |Link to Comment
  • Is The Long Awaited Correction At Hand? [View article]
    The market is at all-time highs. Valuations are now more absurd than they were in 2007. This bubble will eventually burst....it's inevitable.

    http://bit.ly/1aefKIT
    Apr 6, 2015. 10:06 PM | 1 Like Like |Link to Comment
COMMENTS STATS
899 Comments
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