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Boris Marjanovic  

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  • How Not To Beat The Market [View article]
    MyCsPiTTa,

    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]
    veggivet,

    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]
    6228371,

    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: http://bit.ly/1BbZYFN
    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 stocks....like 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]
    omck,

    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]
    Augustus,

    "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
  • 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
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