S&P 500

Discussion of the Stock portion of the Permanent Portfolio

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dualstow
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Re: S&P 500

Post by dualstow » Wed Oct 30, 2019 2:11 pm

I Shrugged wrote:
Tue Oct 29, 2019 6:50 pm
It has been brought to my attention that the 6 FANG+ stocks make up 19% of the index cap.
Yikes.
You have two choices, I Shrugged: buy the broad market (well, S&P 500 isn't bad, or VTSAX (most of the stock market) or build a time machine. It's usually a few stocks that carry the gains (and the losses), but it's not easy to find them early on.

Top-posting: I'm guilty of that, too, although I usually only do it if I'm quoting a post immediately above.
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Re: S&P 500

Post by vnatale » Wed Oct 30, 2019 7:21 pm

Xan wrote:
Wed Oct 30, 2019 10:44 am
vnatale wrote:
Wed Oct 30, 2019 10:26 am
Had not noticed.

However, my preference is that all did the same as I do since I view the latest as new material and the prior as footnotes.

Part of my being in independent in many ways.

Vinny
Xan wrote:
Wed Oct 30, 2019 10:16 am


Vinny, have you noticed that nobody else here does top-posting, and when you do, it makes conversations difficult to read?
I don't think it's realistic to expect everyone else to change, but if you're okay with people having trouble reading posts you participate in, okay by me.

I'm not sure it qualifies as "independent" if you want everybody else to do things the way you do them, though.

The quoted bits are the part being replied to, so it's like having a recap of last week's episode at the start of the new episode instead of after it.
We'll see if this works.

But an expanded "independent" answer. My "independent" answer was not meant to say "and, I expect others to do it my way." It meant I independently decide for myself. And, that generally means I also think it's a better way for others.

I've been in my email discussion groups. And, over the decades there have been the top versus the bottom debate.

My reasons for top:

1) I've read so many emails that are long, long, long, long. It takes me forever to get to the bottom of them, scrolling through things I've already seen and read, just so I can read someone writing two words like, "I agree."

2) Of course, it will also take me that same amount of time to get to the bottom for me to write anything.

3) I prefer to immediately see the new on top. In regards to prior discussion, a. I can infer what is on the bottom from the context of the fresh response b. If I've been actively reading the discussion, I remember what is below. c. If a. and b. don't work, it's all there on the bottom for me to find.

4) When I think of the emails (both personal and business) it does seem that most of the world has moved to responded on the top?

Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: S&P 500

Post by ochotona » Wed Oct 30, 2019 9:17 pm

I'm going to check with my trading coach (Novell) concerning MOC orders and ETFs with low volumes. I've heard Meb Faber discussing this topic, and his contention is that as long as the underlying securities are liquid, the ETF will be also. Of course, spreads will be larger, but I'm thinking MOC orders would eliminate all concerns about spreads, you just get the underlying at the close.

"Hey Peter,

No MOC orders don't get around the issues associated with low volume if your order is large enough to move the price at the close. Happens very very rarely but it can happen.

Paul"
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Re: S&P 500

Post by jalanlong » Thu Oct 31, 2019 8:58 am

I need to be educated on the issue of low volumes but if I am going to buy and hold this ETF in my PP for many, many years (I hope), what is the issue for me purchasing this instead of a higher volume etf?
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Re: S&P 500

Post by ochotona » Thu Oct 31, 2019 10:18 am

jalanlong wrote:
Thu Oct 31, 2019 8:58 am
I need to be educated on the issue of low volumes but if I am going to buy and hold this ETF in my PP for many, many years (I hope), what is the issue for me purchasing this instead of a higher volume etf?
For buy and hold, definitely choose lower expense ratios. You just don't want a tiny $20 million ETF which is on the Death Watch List.
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Re: S&P 500

Post by ochotona » Sun Nov 24, 2019 12:40 pm

What better argument for equal-weighting in your stock allocation? (Lisa A. always has the best tweets).
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Re: S&P 500

Post by dualstow » Sun Nov 24, 2019 1:05 pm

Seems like a good argument for holding some Apple and Microsoft.
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Re: S&P 500

Post by ochotona » Sun Nov 24, 2019 1:27 pm

dualstow wrote:
Sun Nov 24, 2019 1:05 pm
Seems like a good argument for holding some Apple and Microsoft.
Apple and Microsoft as the VP then? Or Apple as Core? ;D
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Re: S&P 500

Post by dualstow » Sun Nov 24, 2019 2:41 pm

ochotona wrote:
Sun Nov 24, 2019 1:27 pm
dualstow wrote:
Sun Nov 24, 2019 1:05 pm
Seems like a good argument for holding some Apple and Microsoft.
Apple and Microsoft as the VP then? Or Apple as Core? ;D
Apple core has a ring to it. :-)
I hold both in my vp but certainly not as the vp. You know, after a cup of coffee you can read up on virtually any company and it looks good. Dangerous.
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Re: S&P 500

Post by mathjak107 » Sun Nov 24, 2019 5:31 pm

The problem with individual stocks is you not only have to know all about the company you bought but you better know what the competition has on their drawing board
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Re: S&P 500

Post by dualstow » Sun Nov 24, 2019 5:33 pm

mathjak107 wrote:
Sun Nov 24, 2019 5:31 pm
The problem with individual stocks is you not only have to know all about the company you bought but you better know what the competition has on their drawing board
Which is of course impossible to know.
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Re: S&P 500

Post by mathjak107 » Sun Nov 24, 2019 6:31 pm

Exactly .....so individual stocks take on a whole other level of risk that broad based funds don’t have ...individual company risk is a biggie
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Re: S&P 500

Post by Smith1776 » Thu Dec 12, 2019 2:20 am

What really strikes me as interesting is how many different schools of thought there really are in investing.

The efficient market guys; the value investing guys; the factor tilters; the stock pickers; they talk past each other almost as if they're speaking a totally different language.

A basic disagreement on the realities of how the market functions -- the axioms, if you will -- lead to these totally different world views on how to deploy your capital.
I still find the James Rickards portfolio fascinating.
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Re: S&P 500

Post by dualstow » Thu Dec 12, 2019 6:31 am

And even individuals change style. A value guy becomes a factor guy.
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Re: S&P 500

Post by Smith1776 » Thu Dec 12, 2019 2:00 pm

I have definitely become a factor guy myself.

A switch from the Benjamin Graham value approach is also partially what prompted me to leave the field of finance entirely.

I did the CFA Level 1 exam and was SO disillusioned by how much the material contradicted itself.

1) The material preaches efficient market theory
2) Almost all of rest of the material teaches you how to do fundamental analysis

So basically the material is teaching you how to do the thing that even the CFA society itself says has a low chance of success. What's the point, then?
I still find the James Rickards portfolio fascinating.
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Re: S&P 500

Post by ochotona » Sat Dec 14, 2019 6:20 pm

@TN tweeted: "S&P 500 is very top heavy again: top five stocks (Apple, Microsoft, Google, Facebook & Amazon) at 16.5% - the most weight since 1999"

Anything but market cap weighted... equal-weight, dividend payers... anything but FAMAG... what a trap
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Re: S&P 500

Post by sophie » Sun Dec 15, 2019 9:24 am

ochotona wrote:
Sat Dec 14, 2019 6:20 pm
@TN tweeted: "S&P 500 is very top heavy again: top five stocks (Apple, Microsoft, Google, Facebook & Amazon) at 16.5% - the most weight since 1999"

Anything but market cap weighted... equal-weight, dividend payers... anything but FAMAG... what a trap
Interesting how those are all tech stocks. So there's not only a concentration of a few stocks, but also in that one sector.

This makes me glad I started adding a set of individual stocks to complement my index fund holdings. I avoided the tech sector for exactly the above reason, and picked blue chips or solid companies spread around the other sectors.
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Re: S&P 500

Post by Smith1776 » Sun Dec 15, 2019 12:59 pm

sophie wrote:
Sun Dec 15, 2019 9:24 am
ochotona wrote:
Sat Dec 14, 2019 6:20 pm
@TN tweeted: "S&P 500 is very top heavy again: top five stocks (Apple, Microsoft, Google, Facebook & Amazon) at 16.5% - the most weight since 1999"

Anything but market cap weighted... equal-weight, dividend payers... anything but FAMAG... what a trap
Interesting how those are all tech stocks. So there's not only a concentration of a few stocks, but also in that one sector.

This makes me glad I started adding a set of individual stocks to complement my index fund holdings. I avoided the tech sector for exactly the above reason, and picked blue chips or solid companies spread around the other sectors.
I, too, am also glad I have some diversification away from TSM upon hearing this.

This concentration in the S&P was rather obvious in retrospect, but I didn't realize this myself.
I still find the James Rickards portfolio fascinating.
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Re: S&P 500

Post by boglerdude » Mon Dec 16, 2019 2:20 am

And those tech stocks will outperform because of your pessimism, just like Facebook has since IPO. The Wall of Worry!
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Re: S&P 500

Post by sophie » Mon Dec 16, 2019 7:53 am

boglerdude wrote:
Mon Dec 16, 2019 2:20 am
And those tech stocks will outperform because of your pessimism, just like Facebook has since IPO. The Wall of Worry!
Of course they will, until they won't.

I still have some PTSD from the advisor who put my Roth IRA 100% into tech stocks in 1999/2000. You can guess what happened after that. It went from ~$100K to about $12K. Not saying history is going to repeat itself, but that was an expensive lesson in avoiding stock concentration in any form. (Also in trusting advisors to make investment choices - I was young and dumb at the time.)

Although I should point out, the portion of the S&P 500 we're talking about here is only 16%. A 2000-style tech crash would not cause anything like my experience above.
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Re: S&P 500

Post by vnatale » Mon Dec 16, 2019 9:09 am

sophie wrote:
Mon Dec 16, 2019 7:53 am
boglerdude wrote:
Mon Dec 16, 2019 2:20 am
And those tech stocks will outperform because of your pessimism, just like Facebook has since IPO. The Wall of Worry!
Of course they will, until they won't.

I still have some PTSD from the advisor who put my Roth IRA 100% into tech stocks in 1999/2000. You can guess what happened after that. It went from ~$100K to about $12K. Not saying history is going to repeat itself, but that was an expensive lesson in avoiding stock concentration in any form. (Also in trusting advisors to make investment choices - I was young and dumb at the time.)

Although I should point out, the portion of the S&P 500 we're talking about here is only 16%. A 2000-style tech crash would not cause anything like my experience above.
Misery loves company? I had one IRA that I'd invested all in the Janus Mercury Fund 1998. I am almost certain that it was high technology stock concentrated. I'd invested $30,000 and at its peak it hit $130,000. In January 2003, I sold it all for $25,000.

Vinny
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Re: S&P 500

Post by Kbg » Mon Dec 16, 2019 10:11 pm

Cap weighted is momentum is disguise, period. However, you are also loading up on the index’s/country’s most successful businesses. There are worse things you could do.
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Re: S&P 500

Post by Kbg » Mon Dec 16, 2019 10:11 pm

Cap weighted is momentum is disguise, period. However, you are also loading up on the index’s/country’s most successful businesses. There are worse things you could do.
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Re: S&P 500

Post by boglerdude » Thu Dec 19, 2019 1:44 am

So you have 100 investors and a stock market with 3 companies. They value company A as worth $1 trillion, B 800 million, and C 200 million. Total market cap 2T.

These investors combined own 50% A, 40% B, 10% C in their portfolio. Some may hold different percentages than others.

These investors are smarter than me so I dont question what they think the companies are worth. But if I do NOT hold 50% A, 40% B, 10% C - is that going against their collective wisdom?
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Re: S&P 500

Post by Kbg » Thu Dec 19, 2019 5:58 pm

You don’t have to buy a cap weighted index, you can buy an equal weighted one, a factor based one, or skip large cap altogether. Why complain when there are so many alternatives?

The method is the method.

Now historically when these huge caps decide to take a nose dive you are going off the board with them, this is a known for anyone who has done their homework. Your alternative options are use something else or try your hand at market timing.
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