The wealth-building thread

[HiFidFan]

Yes but buying big in April 2020 was pure luck on my part: The stock market had already recovered somewhat from an earlier crash, but I feared that a bigger, longer-lasting crash might be just ahead, and I agonized over whether to simply keep my money invested in the money market (<1% returns), but eventually decided that I didn't have a clue how to know when it was the "right" time to buy, just as I don't know if now is a good time to sell.

That was very good timing, good for you. As you said, pure luck (and big cojones).

When I think back to April 2020, when you bought big, CV was largely an unknown factor, no cure/vaccine in sight, job losses mounting, governments clueless, healthcare institutions bumbling, global death rates horrifying. My decision to "sit tight" back then seems logical. But in hindsight of course, very very wrong.

 

[muslhead]

Again, in the short term. Over 30-40 years, not a chance, especially for most of us, who don't have anywhere near the access Lynch had to company information.

https://www.fool.com/investing/2018/01/03/warren-buffett-just-officially-won-his-million-dol.aspx

https://awealthofcommonsense.com/2016/07/peter-lynchs-track-record-revisited/

Respectfully disagree there are plenty of people I know who have done this. Not for 40 years though, 30 yes, 40 no. None of them look at one piece of company info

 

[Pdxwayne]

Respectfully disagree there are plenty of people I know who have done this. Not for 40 years though, 30 yes, 40 no. None of them look at one piece of company info

Plenty people like in who? Anything we can track publicly? How do you compare performance?

 

[q3cpma]

Understand the sentiment but logic will tell you that they (pinkos or politicians) take a percentage thus the more you have the more you have left ...
"Enough" is a moving target when it comes to money.

But when you factor in the lack of various "aids for the poors" and the taxes on stuff said poors can't afford (car related, mainly), what Mazarin said in Le Diable Rouge is true: the middle class is the state's everflowing coin purse.

Combine that with the heavy toll of celibate life and ever rising prices for important stuff, and you get wage slavery: a life with enough money to live in the now and consume stupid stuff mindlessly, but not enough to think constructively about the future (housing credit instead of renting, new car instead of expensive repairs, etc...), nevermind doing both at once.

 

[JeffS7444]

Damn, that sucks. I missed the opportunity to quintuple my money on Tesla and some other things, but at least my money stayed in since I didn't sell.

Or me and Apple stock when it was $13 in the late 1990s: I was aware of it, and could have invested $10K, but at the time there was no indication that Apple was going to become more than a seller of trendy, candy-colored computers. Even iPhone by itself might have fizzled out after a few years.

 

[muslhead]

Plenty people like in who? Anything we can track publicly? How do you compare performance?

Google is your friend.
Do they manage other peoples money? Some do but doubt you have enough to meet their min (if you did you would likely not be asking this question) others do not.
Their performance is reported and audited and verified

 

[Pdxwayne]

Google is your friend.
Do they manage other peoples money? Some do but doubt you have enough to meet their min (if you did you would likely not be asking this question) others do not.
Their performance is reported and audited and verified

You said you know plenty. Just a couple of link would suffice. Those with 30+ years records of consistenly beating S&P and quote "None of them look at one piece of company info".

 

[Chromatischism]

I assume that there's a reason for the reduced taxes for investment income

Easy. How do you think congresspeople and the folks that occupy the executive branch make their money? You think they became millionaires on their salary alone? And all their donors putting pressure on them, too

 

[HiFidFan]

How do you think congresspeople and the folks that occupy the executive branch make their money?

Easy. Their spouse happens to be a clairvoyant investor

 

[Chromatischism]

Or me and Apple stock when it was $13 in the late 1990s: I was aware of it, and could have invested $10K, but at the time there was no indication that Apple was going to become more than a seller of trendy, candy-colored computers. Even iPhone by itself might have fizzled out after a few years.

Yep, or Bitcoin when it was $100 or even $1. We could all have our own Audio Precision/Klippel NFS/speaker shuffler room retirement hobby.

Hindsight is ALWAYS 20/20, but looking forward is a bit fuzzy.

 

[preload]

Peter Lynch destroyed indexes. Actively managed funds can be better than indexes. You don't need 500 companies. Of course, choose carefully. And you don't have to stay with the same ones forever.

Statistically, the majority of actively managed funds did not consistently outperform passive, whole market index funds. So, unless you have a crystal ball, you won't necessarily be able to select the winners.

 

[Chromatischism]

Statistically, the majority of actively managed funds did not consistently outperform passive, whole market index funds. So, unless you have a crystal ball, you won't necessarily be able to select the winners.

Statistically, yes. I'm just saying it's possible. You don't even need to try to pick super cheap stocks; the big established names are doing very well. This is where most of the wealth in working people's 401k's was built over the last decade. But you didn't need 500 companies or 2000 companies to get there. A smaller selection would be fine if you were inclined to trim the fat a little. You'll have to decide if it's worth your time.

The biggest problem is you have to have money to make money, since $0 earns nothing. And that is where much of the working class sits.

 

[digitalfrost]

Peter Lynch destroyed indexes. Actively managed funds can be better than indexes. You don't need 500 companies. Of course, choose carefully. And you don't have to stay with the same ones forever.

Speaking of Peter Lynch. I love this talk. I watch it at least once a year. Highly entertaining. Lynch starts speaking around the 9 minute mark.

 

[Jim Matthews]

Anyway I prefer crypto to the stock market these days.

Gotta stash your Beanie Babies profits somewhere.

 

[Ralph_Cramden]

Another great resource for the rational investor. https://crr.bc.edu/category/working-papers/working-papers-financing-retirement/

 

[Jim Matthews]

I'll take a stab at this.

I got hammered by the 2008 downturn, when I had (relatively) little in my 401k. I simply banked cash.

In 2013, I dipped a toe back in using Vanguard.
Performance to date exceeds 16% return.

*ALL* managed funds take a percentage of gains.
*SOME* charge less for membership.

I chose Vanguard because the management fees are relatively low.

It doesn't sound like much, but any fees over 0.05% are like an anchor - restricting growth.

*****

I buy stocks in fields I know something about - just as the publicists start the hype. *ALWAYS* take profits when available - few companies have growth in share price as a steady state.

If a stock must be held longer than 6 months - I keep my allocation small relative to other holdings (mostly ETF and tax free bond funds).

*****

I buy into only enterprises that are actively producing sales, either in a service sector or tangible product.

*****

If the "business model " can't be explained in less than twenty words - it's probably not credible.

 

[Chromatischism]

*ALL* managed funds take a percentage of gains.
*SOME* charge less for membership.

I chose Vanguard because the management fees are relatively low.

It doesn't sound like much, but any fees over 0.05% are like an anchor - restricting growth.

Yes, but one thing I've noticed that people on message forums advocating for these (and to be clear they are perfectly fine funds so I'm not against them at all) overlook is that a fund's performance returns already have the expense ratio subtracted from them. That is, you're already seeing it in the result. So, when you're looking at an actively managed fund and it has higher returns than your index funds, it simply has higher returns, even after expenses.

But like we discussed, it's still not for a buy and hold forever approach. You still want to keep an eye on things. Even the greatest like the funds run by Lynch don't stay on top forever. Times change. The technological landscape changes. Regulations change. The best managers stay abreast of these things, but what if they retire? I think someone who doesn't look at their investments at least from time to time and make adjustments is probably not very invested in having the best retirement they can.

 

[preload]

I'm going to offer you the best piece of advice: Don't take financial advice from people on an internet forum.

 

[Marc v E]

I would recommend Peter Lynch.
Best things I learned from experience are:
-look forward farther ahead than the stock analysts
-buy stocks from companies that disrupt the market
-and who's employees are really happy and motivated (glassdoors).
-Buy and hold 1 to 3 stocks you have got a good understanding of

All the don'ts:
- don't buy derivatives, going short etc. Only about 10% of people succeed. I know I certainly wouldn't.
-don't do what everybody else does.

With this strategy I multiplied my assets by 8x in 4 years.

 

[HiFidFan]

Speaking of Peter Lynch. I love this talk. I watch it at least once a year. Highly entertaining. Lynch starts speaking around the 9 minute mark.

Funny how back then he talks about his best stock ever was Fanny Mae.