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Your time horizon is too short. If you had left your money where it was instead of taking it out at the first sign of danger then it's likely you would have made it all back by now. There's a lot of volatility in the stock market (that's why the returns are higher than savings, money markets, etc), but the spikes and dips average out if you're thinking in terms of decades and not months.

That's not to say that your startup isn't a better investment, though.




I go into more detail on this in my post below, but I think that this is actually not true any more, because the basic nature of the economy has changed. If you adjust for honest estimates of inflation, stocks have been down consistently for 15 years. That starts to look a lot like a "new normal". Then you start adding in survivorship bias, selection bias, etc; the picture is not pretty.

Maybe it's not the new normal, and maybe stock markets will start rising again as they have historically, but when you see a lull this long, it at least suggests the strong possibility of a pattern break.


There is a chart at http://www.nytimes.com/interactive/2011/01/02/business/20110... that shows the average annual return for an investment in the stock market broken down by year of the start and end points. The returns are high if you invest early in a bull market and sell before the next crash, otherwise the returns are rather low. The conventional wisdom that holding stocks for several decades and getting annual returns of 7% or more seems wrong.


Thanks, means I didn't have to dig it out.

It really makes me wonder about investing my savings into my tracker fund when I saw that. I'm in the UK, and my guess is, due to very tight correlation between the markets we did the same sort of performance.

So long term, market beating, savings beating growth, is not assured. Especially not in "developed" countries. If you think the GDPs of Western countries is going to start increasing (significantly) any time soon, please explain why!

So if it isn't assured, I've been looking into index tracked funds in other markets, particularly APAC. Not sure if it's a great idea, but probably better than a UK indexed fund. I figure it's probably worth a try.

It's totally about when you put in. My parents are still down on a couple of their funds from 1999 ish. Break even happened just recently for them. They'd have been better off with that cash in a long term cash bond.

Why are there so many angel investors right now? Because only high-tech is offering any appreciable growth in the USA.


Having just scanned the rest of this thread. My future plans:

* max out the company pension scheme in terms of contributions.

* continue to max out the UK tax free savings & investment schemes. It's only £10k ish a year but it starts adding up pretty quick.

* Currently almost half my cash savings are not in the UK, as interest rates here now are poor. I am considering an additional offshore savings account in an interesting APAC country. Maybe Singapore, as many rich people in APAC do their banking there.

* property - I expect I will look into forming a Ltd company as a holding company, where any income is heavily re-invested. This will probably be seeded with a small inheritance, or my cash savings if I don't burn through them when I get my business off the ground

* Yes, I will be investing in myself. One month in to 2011, progress is slow, but I will have a spare time business running by the end of the year.


>Your time horizon is too short.

Didn't John Keynes say:

"The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again."

Though apparently, he was talking about inflation in this case... but the point is, the nature of risk is such that while it works out on average, you still end up with an individual outcome at a fixed point in time which may vary a lot from the expected payoff. Not that I do completely agree with tastybites, but I see the logic.


> Your time horizon is too short

That's not really the point, I think the point is that I shouldn't have been investing in something that could evaporate on paper in 3 months.

Either way, yes, the point is I'm a terrible equities/retirement investor and a better small business person. Everyone here has excellent reading comprehension, as I would expect on HN.

> That's not to say that your startup isn't a better investment, though.

I didn't sell at the first sign of danger (first of all - selling at the first sign of danger would have been a GOOD idea, but my father, the successful older investor, told me to hold on as it crashed.). I sold after the market had come back by around 60-70% from the lows. That was good enough for me, especially since another 'double dip' was a very real possibility in the beginning of 2010.

If I had sold at the bottom I would have lost nearly everything. But I finally liquidated after my startup was consistently making money and I actually wanted the cash to put back into the business / spend.

Keep in mind I was never broke - I just had a large proportion disappear for a while. That drove me to do 'smarter' things with it after some of it came back.

Having said all that, "You should have held on to it" is standard 20/20 hindsight that makes a market crash sound so predictable. I think I had pretty good forward-sight given the situation.


Everything can evaporate in 3 months. The world is a risky place, tomorrow someone could come out with something to make your startup irrelevant. Houses prices dropped, used car values drop with the GM and Ford bail out, we mine more gold every year. You show me an investment that is always going to beat inflation and I'll show you a scam.

The only way to real be secure is diversification and never stop innovating and hustling. If you do you'll get burnt no matter what you have your wealth in.


You sold because you were afraid of another "double dip" that didn't happen, and now you think you had "pretty good forward-sight"?

"You should have held on to it" is not hindsight, that's typically stock market investment advice. Unless a company's stats have changed to the point where it's now a bad investment, you should hold it and ride out the storm.


Yes, the entire point of my original post is that I am a terrible stock market/retirement investor and a much better small business person.

You must have missed the part where I didn't sell at the bottom, started a profitable company, liquidated the equities to invest into myself at +60% off lows, and then came out ahead 2.5 years later.

'Oh you should have held' is hindsight advice, it's not real advice. It isn't even really saying anything at all. It's just something you say after you hear someone's story about how they lost money.


  > 'Oh you should have held' is hindsight advice, it's not real advice.
I think Warren Buffett would disagree with you.


I'm not sure how many posts it's going to take to tell you I did hold on, and that's why I didn't go broke and had the money to investment into my own biz.

I think at this point you're just trolling me now, so I'll end it with one more point:

If you know anything about Warren Buffett, you'd know his main thesis is to invest in only the things you understand. That's the advice I ultimately followed to end up in a better place.

Holding onto investments that you don't understand is not his advice at all - that's just a shitty platitude.


This is one thing that William Bernstein (I recommend his books) points out. You need to be able to calmly watch your portfolio halve in value and sit it out if you're going to be a buy and hold investor (or any investor, really). I have several friends who took their money out near the bottom of the latest crash and put it it cash or cash equivalents. It's the absolute wrong choice investment-wise, but it's understandable.

Selling before the bottom and buying before the climb is the right thing to do, but if you can do that, you're not spending time reading HN, you're either working hard as a trader or relaxing on your desert island.




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