Investing

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Blazin

Blazin

Creative Title
<Nazi Janitors>
7,090
36,558
2000 shares of GILD with a $73 cost basis sell or hold? (about 20% of portfolio, yes I know that's too much but earnings growth of GILD have been really impressive only 19-20x next years earnings and a peg ratio of around 0.50)
 
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Chesire_sl

shitlord
331
1
retirement accounts just something the kleptocrats will loot. as the economy fails harder than a sarah jessica parker porn movie
 
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Soriak_sl

shitlord
783
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ShakyJake_sl said:
Thoughts?
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I can see it being a success from a pure marketing perspective... but from an investing perspective, it makes no sense to me. I might well think that renewable energies are going to take off, but even if that is true in the next 20 years, there's no saying that a "renewable energy motif" would make me any money. The firms that are around now may lose big, new upstarts may rise, and the whole thing may take so much time that I miss all the gains from the market as a whole.

Broad indices outperform actively managed funds for a reason, and the same math that tells you that's going to happen also tells you why narrowing down your investments by motif is not going to work either. What you do here is even worse than most actively managed funds: you narrow down your selection to a bunch of firms whose returns are going to be highly correlated. Why would anyone want to do that?
 
Eomer

Eomer

Trakanon Raider
5,472
272
Soriak_sl said:
Broad indices outperform actively managed funds for a reason, and the same math that tells you that's going to happen also tells you why narrowing down your investments by motif is not going to work either. What you do here is even worse than most actively managed funds: you narrow down your selection to a bunch of firms whose returns are going to be highly correlated. Why would anyone want to do that?
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I remember reading somewhere that some research has shown that there's a specific way of index investing that does better than actual index investing. Something about how the fund is weighted, whether by market cap or something else. I don't really remember what. It wasn't active trading, but it was some sort of fundamentally analyzed indexing.
 
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Vilgan_sl

shitlord
259
1
Eomer_sl said:
I remember reading somewhere that some research has shown that there's a specific way of index investing that does better than actual index investing. Something about how the fund is weighted, whether by market cap or something else. I don't really remember what. It wasn't active trading, but it was some sort of fundamentally analyzed indexing.
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That sounds like modern portfolio theory, which most people who invest in indexes are using as well. Basically, you spread out into different asset types with your indexes and then rebalance occasionally. The rebalancing brings stuff back into correct portions, and creates a natural sell high buy low effect. Even with that though, you still want most of your base funds to be passive or indexed though.

As Soriak already mentioned, the motif stuff seems like great marketing but a terrible investment strategy.
 
Falstaff

Falstaff

Ahn'Qiraj Raider
8,436
3,384
I've had an interest in HFT ever since the Haim Bodek/Wall Street Code video on HFT some months ago was posted here. Still haven't read Flash Boys yet but hopefully will pick it up this weekend.

Anyways this was probably the most compelling reason to watch CNBC since... ever?

Katsuyama vs. O'Brien - who won the fight?
 
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rinthe_sl

shitlord
102
2
Eomer_sl said:
I remember reading somewhere that some research has shown that there's a specific way of index investing that does better than actual index investing. Something about how the fund is weighted, whether by market cap or something else. I don't really remember what. It wasn't active trading, but it was some sort of fundamentally analyzed indexing.
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I'm not sure what the study is, but I'd bet it was one of two things. Either the study was bad and doesn't account for random market movements, which most are to do with markets. Or the specific way was to do your own index investing by actually buying some stocks and miss out on the fees and hidden fees of index funds.



That CNBC interview was horrible. That guy on the right was worse than a politician interviews. Complete crap. I understand 'entertainment tv' has a place like bill o'reily. But surely interviewers can do a better job than that. Just downloaded Flash Crash. Let's see if there's anything new in it.
 
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Soriak_sl

shitlord
783
0
rinthe_sl said:
I'm not sure what the study is, but I'd bet it was one of two things. Either the study was bad and doesn't account for random market movements, which most are to do with markets. Or the specific way was to do your own index investing by actually buying some stocks and miss out on the fees and hidden fees of index funds.
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I wouldn't be so sure. For example, the Dow is price-weighted, whereas the S&P 500 is capitalization-weighted. I suspect there may be a (tiny?) difference in how well suited they are for index investment on that basis. On top of that, the Dow indexes only a small number of firms. Heck, there are a ton of indices out there... it wouldn't at all be surprising that not all of them are equally useful when it comes to diversification.

On top of that, how an index fund tracks the index also matters:

Vanguard Total Stock Market ETF seeks to track the investment performance of the CRSP US Total Market Index, which represents approximately 100% of the investable U.S. stock market and includes large-, mid-, small-, and micro-cap stocks regularly traded on the New York Stock Exchange and Nasdaq. The fund invests by sampling the index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the full Index in terms of key characteristics. These key characteristics include industry weightings and market capitalization, as well as certain financial measures such as price/earnings ratio and dividend yield.
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I looked at a Swiss index fund the other day that is routinely off by 1%+ tracking a set of about 30 stocks. How they seem to (mis)manage that is beyond me.
 
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rinthe_sl

shitlord
102
2
Flash Boys is a pretty good read, lewis writes an interesting, informative and easy to understand tale, much like Liars Poker. Worth checking out,.

I think this will probably get the ball rolling that will eventually shutdown HF scalping.
 
Eomer

Eomer

Trakanon Raider
5,472
272
Soriak_sl said:
I wouldn't be so sure. For example, the Dow is price-weighted, whereas the S&P 500 is capitalization-weighted. I suspect there may be a (tiny?) difference in how well suited they are for index investment on that basis. On top of that, the Dow indexes only a small number of firms. Heck, there are a ton of indices out there... it wouldn't at all be surprising that not all of them are equally useful when it comes to diversification.

On top of that, how an index fund tracks the index also matters:



I looked at a Swiss index fund the other day that is routinely off by 1%+ tracking a set of about 30 stocks. How they seem to (mis)manage that is beyond me.
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Pretty sure the study I was talking about was referenced in an article in the Economist, which is where I read about it. Possibly a Buttonwood column. The study itself would have been way over my head. Like I said, the way they weighted the portfolio/index was based upon some sort of fundamental analysis that wasn't simply market capitalization, as the vast majority of indexes are. Wish I could remember the details. The long and short of it was that they outperformed a market-cap index by a point or two.

edit: This article talks about it, but I'm not sure it's the one I recall having read:Buttonwood: On the wrong track | The Economist
 
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