Comment by WalterBright

Nope not all cash, it goes down to around 50% stocks at the target date (and actually continues to get slightly more conservative after). Just look at the current portfolio of the Vanguard 2025 fund: https://investor.vanguard.com/investment-products/mutual-fun...

You still need to be invested in equities at retirement otherwise inflation just eats away at the value of the cash

My target date 2050 funds have performed 50% less than my S&P 500 and like 30/40% less than my total stock market fund.

This is one of those things where again, one will have to weigh the costs of both alternatives. A rebalancing ETF usually has higher costs (management fees, but possibly also internal trading costs that show up as performance beneath benchmark index), but of course, manually rebalancing also has a cost – the cost of one's time and effort!

There are scenarios where these target date funds are not good.

Rebalancing into bonds and mmmfs is a form of insurance against catastrophic losses equities. But if you have a sufficiently large account then catastrophic losses that affect your life are extremely rare, if they do occur they will likely affect your bond portfolio as well, and the expected loss vs 100% equities over 15-20 years is significant, something like 10x the value of the insurance you are buying.

If you want insurance for a large account then long-dated put options 20% of the money are much cheaper.

Rebalancing is just selling the high performers and buying the low performers. In his example, you'd keep your "safe asset" allocation at say 15% - if your other stocks did well one year, you'd sell some and buy more "safe assets" so they again constitute 15% of your total value. If stocks tanked, you'd instead sell some "safe assets" and buy more stocks, again until your "safe assets" are back at 15% of total value.

I have only read half of Carver's Smart Portfolios yet but I find myself agreeing with much of it. I have started writing up a review of it sometime soon, although I might not publish it for free in a while!

Not what I meant, but capital gains are another issue, but I am not in the US. In the UK we pay a 0.5% tax on ever transaction and often around £10 per transaction, so its quite substantial. I should probably have said costs, not fees.

How much are total costs in the US?

If you trade frequently even low costs add up. If its 0.1% and you trade monthly it ends up being 1.2% over the course of an year.

You also pay a spread every time you trade, especially if you're using a retail brokerage like robin hood that sells order flow to market makers.

It doesn't show up anywhere in your statement, but it's a real trading fee nonetheless, so it's still better not to trade too much

The explicit fees are near zero, but if you watch your trade you always get an adverse price.

You pay the spread and you also have impact in the market.

IANAL but it seems like whoever is running Bitfinex should endeavour to make all the creditors whole in whatever medium their debt was denominated, according to seniority. So if they owe users X BTC and other creditors Y USD, and the BTC debts are senior, they should hand out the BTC to users regardless of its dollar value and, if there is any left, auction it off for the benefit of the (junior, in this scenario) USD creditors.

https://support.bitfinex.com/hc/en-us/articles/115003282929-...

Apparently they created a token that entitles you to the lost bitcoin should they be recovered.

> That is, not just the companies, but also the market, the industry trends, etc.

That sounds like exceedingly bad advice.

Eg I work in software (like many people here). So my career itself already heavily exposes me to ups and downs of that industry; but it's also the industry I know best. The advice you quote would see me increase my already outsized exposure to that industry ever more.

Diversification is the only free lunch in finance. Your advice rejects it.

> The problem with most ETFs is that you'll still be investing in a bunch of dud companies, whose only reason for staying in the market is by virtue of being big (think HPs and IBMs, for example).

Feel free to use the gambling money part of your portfolio to short them.

And since HP and IBM etc are publicly traded, there are already lots of short sellers around making sure the prices stay reasonable.

The problem with ETFs is that many of them have crazy management fees.

Don't just blindly buy an ETF that fits your investment goals. Many of those bespoke ETFs have 1%+ management fees.

You can look up how even a 1% fee can gobble up piles of money over years.

Yuppies were a thing in the 1980s. I think you have your timelines off.

I thought that was shorting biotech stock days before clinical trial results get announced?

Sometimes I ask GPT to run Bayesian analyses on varying hypotheses. I just did that for the several parent comments to see if we could get some reasons as to "why day trading doesn't work." Perhaps this will amuse you as well: https://chatgpt.com/share/67888cf4-1aa4-8011-b46b-77e5e9da12...

Oh there's more luck required than that. You have to get lucky many times to win at a 10x stock.

- You have to be lucky enough to find it when it's cheap.

- You have to be lucky enough to hold on to it even if it loses money

- You have to be lucky enough to not sell it when it's at only 5x and hold off for the top

- you have to be lucky enough to have bought enough initially that the return is meaningful to you

These are the thoughts that made me clean up how I invest and stop thinking I'll get lucky at some point just rolling the dice. It's way more luck required than just buying in early.

QQQ is up 5x in 10 years. Being an ETF, that means many of its components must be 10x.

I suppose it's dependent on your time horizon. MSFT is up around 10x since Nadella took over. It's more common over 20 years, obviously.

I've done it repeatedly over the past ten years while DCA'ing. I basically made my own custom funds with 5-10 stocks, set daily purchases for a specific amount, and didn't think about it. Unfortunately I didn't invest enough each time for the amount to be significant, and I also stopped DCA'ing as soon as I couldn't resist checking, saw that I had reached or was approaching a 10% loss in my overall DCA portfolio, and stopped the auto-buys because I felt like I was starting to burn money, when this was actually the best time to continue investing. I haven't sold anything either though. Overall I'm up 80%, which is only $50k.

I think DCA is the most effective investment strategy. Unfortunately I don't have the discipline to keep it up during a downturn. Next time I try it again with picked stocks will be my 4th time, but for now, I'm doing it with index funds. I'm not going to feel as inclined to pause my purchases during an index fund downturn.

Depending on jurisdiction.

Yes, they will automatically exercise if your dead, the same way they auto execute when you are alive. I have sold many options over the years, with many of them exercising. If they expire ITM, you don't have a choice (whether dead or alive) past expiration.

Thanks anyway, this is still interesting.