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Ask HN: I have $450K cash, what should I do to maximize my return?
409 points by plut0 on Aug 1, 2020 | hide | past | favorite | 481 comments
I recently came into some money and now I have $450K in cash burning a hole in my pocket.

I have about $50K in an index fund, own land worth $150K (paid off) and another $200K in industrial real estate investments.

Given this spread, what should I do with the cash? I'm not comfortable investing the entirety into an index fund, given the current socio-political climate.

I'm located in the Midwest, USA.




Just skimming some of the replies here makes me think you will get better advice on the Bogleheads forum [1]. Despite the minimalist appearance it is actually a great place to get sensible financial advice. I would start with the wiki page on managing a windfall [2], then search through older replies to similar questions. This kind of question gets asked there a lot, so there should be some recent threads.

[1] https://www.bogleheads.org/ [2] https://www.bogleheads.org/wiki/Managing_a_windfall


One more to add is Reddit's Personal Finance, where this question gets asked a lot. The wiki (second link, search for Windfall) esp has a number of great articles on topics like this.

https://www.reddit.com/r/personalfinance/

https://www.reddit.com/r/personalfinance/wiki/index


I'd probably recommend https://old.reddit.com/r/FatFIRE over /r/pf as it's more likely to have people that have experienced getting a large lump sum like this.


FatFIRE is for people who want to live large off their savings (usually understood as >$100k/yr passive income, which generally requires $2.5M+ in invested assets). That doesn't seem to describe OP's position. If FIRE is an interest, then https://www.reddit.com/r/financialindependence/ is a better bet.


4% roi is far worse than market and real estate averages.


4% is what FIRE folks consider "safe" over long periods of time. It is based on the well-known Trinity study: https://en.wikipedia.org/wiki/Trinity_study


...but it's still worse than market averages.


I think it is 4% nominal, which leaves some excess returns to keep pace with inflation.


Yes, that's why it's considered the worst case and a safe bet to withdraw


Not anymore.


Based upon what?


It's not 4% ROI, it's 4% withdrawal rate. And even that is not super safe if you're retiring for many decades (the RE part).

You can use a variety of online calculators to back test a 4% withdrawal rate - maybe 80% safe, but 20% of the time you'll go broke before dying.


Why isn't it safe? Or where can I read more on that?


Sure, so there's a few things to look at.

The first is going back to the origins of the 4% number in the first place, the trinity study. The parameters for that were a 30 year retirement period, and success was "not completely run out of money after 30 years, 95% of the time". If you extrapolate from that original study, if you retire for more than 30 years (FIRE includes retiring early), success drops from 95%.

There's articles exploring that, e.g.

https://www.fiphysician.com/safe-withdrawal-rate-early-retir...

https://www.madfientist.com/safe-withdrawal-rate/#:~:text=Th...

And then there are a variety of online calculators where you can play with the numbers yourself.

The other elephant in the room is pre-Medicare healthcare costs.


I really appreciate linking directly to old reddit rather than the crap default.


PF will say the same thing as always (not that it's wrong), i.e. SPY if you're risk-tolerant, some Vanguard I don't recall (VOO?) if you're less so.


VOO and SPY are basically the same thing, SPY is older and structured as a trust, VOO is an ETF. Both track the S&P 500. They'll probably recommend some combination of equity and bonds, probably a split between VOO (slightly lower fees and more efficient payout of dividends -- I do mean slightly) and TLT (20+ year treasuries).

VOO and TLT have limited correlation as treasuries are seen as a safe-haven. We've seen huge spikes in treasury funds recently, since they go up in value when interest rates go down. It's a bit unintuitive, but treasury funds have to cycle through their holdings over time to track the index, so when interest rates on new issues go down, older issues command a premium in the amount of pre-paid interest.


VOO is the same index as SPY (SP500), so that can't be it. Maybe you meant BND, a highly popular total bond market ETF that would be for the risk-intolerant?


Maybe VTSAX?


Bear in mind Personal Finance is pretty conservative. Depending on how much time you have in the market you can take some more aggressive bets. I'm not suggesting r/WallStreetBets style investing but something like a risk parity adjusted pairing of 3X leveraged S&P with 3X leveraged treasuries can yield dramatically better returns over time [1]. I'm not recommending it per se, to each their own risk tolerance and research, but suggesting that if you have time in the market, consider being more aggressive.

I'd suggest something like this.

(1) Have 6 months of expenses set aside.

(2) Max out your tax-advantaged retirement accounts.

(3) Allocate some amount of capital to traditional or conservative investments, and some amount to more aggressive plays. The more time you have in the market, the more aggressive you can afford to be. Having both types of investments will give you the comfort you need during rough times that your riskier plays come through eventually.

(4) If you're looking at property, consider setting aside a down-payment. Keep in mind that if you're employed, buying a house in cash may not be the optimal strategy as you can deduct large quantities of your mortgage payments, giving you, with 20% down, a 5X leveraged investment in real-estate with deductible expenses and historically-low interest rates. Mortgage interest rates are just a hair over inflation, and when you deduct the interest from your taxes, you're actually saving money with a mortgage.

(5) Now that you have a large chunk of capital, you can consider financing some purchases yourself at extremely low rates by taking advantage of margin borrowing. InteractiveBrokers offer 1.5% interest margin loans, and you could, if within your risk tolerance, borrow some amount of money collateralized by your (safe) equity positions. This 1.5% interest is also tax-deductible. Obviously be careful, a margin call is something to avoid, but against a $450K portfolio, I personally wouldn't sweat borrowing $45K.

One thing I was able to do personally is borrow enough on margin to make a down-payment on a property. This allowed me to deduct the entire balance of my mortgage, beyond the $750K cap, and at 1.5% the margin interest is much lower than if I'd financed the whole thing.

[1] https://www.bogleheads.org/forum/viewtopic.php?t=272007


Please stay away from leverage equity index funds.

https://capitalallocatorspodcast.com/wp-content/uploads/2017...

Edit: For more clarity - risk parity can make sense, but I don't think you ever need to use leverage on your equities to get risk parity. The fundamental insight of risk parity investing is that at commonly recommended ratios (50/50, 60/40) the risk (variance) from equities totally dominates the risk from bonds. So the risk parity advice is usually something with a much higher bond mix, but the entire portfolio is leveraged. But DO NOT use levered ETFs that recognize, say, 3x the DAILY movement of the S&P to do this. They don't do what you think. Read that link, or compute the following two scenarios:

1) Market goes up 1.1% on odd days, down 1% on even days. That yields about 9% (200 trading days). But a 3x daily etf product would only get you about 22%, not 27%.

2) Market foes up 1% on odd days, down 1.1% on even. That, sadly, means you lose about 11% on the year. If you use a 3x DAILY etf product, you lose around 75%.


Please read the write-up before replying with blanket statements that aren't relevant in this case :)

That issue is addressed in the bogleheads post explicitly ("How much does the leverage cost?" and "Don't you know that leveraged ETFs are only intended to be held for one day?"), basically the ETFs are risk parity adjusted, and the volatility in the ETFs actually what generates the returns. The strategy makes money from volatility, and the 3X leverage is used to add volatility in, exaggerating the returns.

I think you might find the post interesting because it seems like you are interested in investing. What you're saying is again explicitly addressed there, and factored into the calculation. They work an example of that kind of decay, and how it's mitigated. Specifically, it doesn't matter that you have volatility decay in one of the ETFs because they're uncorrelated, and when one goes up the other goes down, canceling out the effect.

Your blanket statement does not apply to this specific strategy. It's not wrong in general, but it's not relevant here.

If you don't want to read the bogleheads write-up it's also addressed on Seeking Alpha [1].

> "That, sadly, means you lose about 11% on the year."

Not if, as you see in the write-up, you pair it with an uncorrelated 3X leveraged asset and rebalance periodically.

The post includes a backtest to 1987.

[1] https://seekingalpha.com/article/4308489-why-leveraged-etfs-...


I've been using 3x ETFs for the past few years to pursue a Permanent Portfolio style strategy in one account, and an All Weather strategy in another, rebalance annually, and both have been doing well.

Low net volatility, high returns. Backtesting of the strategy shows total returns just under 3x the return of the unleveraged portfolios, just what I expect given the leverage costs.

I expect both strategies to be both market-agnostic and age-agnostic. About as close to fire and forget as you can get.


The right advice is "don't use a leveraged fund unless you want to be involved and look at the market every day"

I've made good money on them as well, but I shuffle money in and out frequently.

It's not a good strategy unless you really want to study things.


That’s true in general, but this strategy is basically set it and forget it (rebalance quarterly for best results), and it works because it’s been carefully balanced to offset decay.


how do you offset the decay?


It's all in the post ("Don't you know that leveraged ETFs are only intended to be held for one day?" section) but there's something we need to clear up before we start.

(1) What people refer to as "decay" is just the way the the daily exposure works on these ETFs. To quote the article:

"Let's say over five days the daily returns of the index are +1%, -2%, +3%, -4%, +5%, and you start with $100."

"At the end of the five days your $100.00 becomes $102.76."

"Now let's use a 3X leveraged ETF. Ignoring ER and other costs, the daily returns are +3%, -6%, +9%, -12%, +15%."

"At the end of the five days your $100.00 becomes $106.80."

6.80 is not 3X 2.76, and it's because down days leave you with less exposure the following day, so you need a bigger up day than the preceding down day to make up for it. However, as the article points out, this dynamic works for you in ETFs that exhibit positive momentum. Since "stocks always go up" -- at least the S&P always goes up over time, so far -- this dynamic works to your favor and the total return of UPRO to date has been 5X the return of SPY.

(2) UPRO and TMF are uncorrelated, and so the positive momentum of SPY causes UPRO performance to exceed 3X, and offset some of the lower-than-3X performance of TMF over time. For the record since 2017, the performance of TMF is 2X that of TLT, give or take.

(3) Further, the way this makes money is actually when the S&P drops 10%, UPRO drops 30%. As people flee assets, they buy treasuries, pushing TLT up 6-7%, which causes TMF to go up 20%. Then at rebalancing time, you sell TMF and use it to buy UPRO, so you sell the 3X winner, and buy the 3X loser at a deflated price. When prices normalize, the extra shares on the losing end in conjunction with positive momentum (and the fact you've reduced the size of your winner before it falls) put you much further ahead than if you weren't using leveraged ETFs.

This strategy makes money on volatility, and should be agnostic to market performance. It actually held up really well during March.


Part of what I do is something I'll call "pile of reserve" investing. I'll hold like $X in some leveraged fund but I have 50x in cash on the side so if things go south I can dollar average my way to profitability. This also requires constantly winnowing down profitable investments to insulate from risk. I've been doing this for about 3 years. About a 3x return on my current holdings, which is about 50% of the maximum I've had in.

This will very likely make less money but really, I can pay all my (admittedly very modest) bills with my portfolio and have returns left over + my actual day job income so honestly, why do I care?

I come from a privileged background and I lived that life. I didn't like it and have no interest in returning to it.

People have to find the strategy and mix that works for them.


I like the strategy and employ it on a portion of my 401k. I think you need to do it in a tax-advantaged account, otherwise rebalancing + short term gains will eat away your profits.

Also, that strategy fails in a rising interest rates environment like in the 50s and 60s (not sure of exact years). Fed has indicated keeping rates low for the next two years, but if they start hiking rates after, I think the strategy would underperform.


You are probably better off doing this in a tax advantaged account, or if you have a large lump sum you want to invest you can do the rebalancing by adding money over time instead of selling the winner and redistributing it to the loser.

The strategy would fail if both interest rates went up and equities went down or stayed flat. While the potential exists for an underperform condition there in a couple of years I personally suspect the fed won’t raise rates unless equities are performing spectacularly. I’m quite skeptical if their 2 year time frame, even to say we may be looking at the new normal.


I appreciate your measured response. I certainly had not dug deep into these daily 3X funds, as the daily/drag aspect seemed (seems?) clearly a problem. But, I can't just pretend the 10yr history of UPRO doesn't exist. I'll have to think more about this.

If it were possible (I recognize it isn't, due to margin limits), would it not be better to be 3x leveraged in your margin account, and simply buy the basic S&P and bond products? Wouldn't that avoid the "drag", and you'd end up better off?


I don't think you can deduct the interest on the margin loan. The rules are fairly simple. The margin loan funds must be used for investment and not for use. Putting a down payment on a primary residence is certainly personal use.


If you have $10K in your checking account and a $440K investment portfolio, and you need to make a $90K down payment, it works like this:

(1) Sell $80K in assets, and use the proceeds, on top of your checking account balance to make a wire transfer.

(2) Now you have $360K in your investment account. You take a margin loan out in the amount of $80K.

(3) Use that $80K to re-establish your $440K investment portfolio.

You haven't used your margin loan to make a down payment, you've sold your assets and used the proceeds to make a down payment. You've then re-taken your investment position using a margin loan. The margin loan isn't collateralizing your down payment, it's making up for a reduction in the net liquidation value of your investment account as a result of your having used it to make a down payment, allowing you to retain your the prior level of exposure to equities in your trading account.

You don't have to go through the actual song and dance, and re-taking your equity positions would result in an IRS wash sale anyways, but that's why withdrawing cash on margin to make a down payment means the margin loan remains an investment expense -- it's there to allow you to retain your desired level of exposure to equities.


thanks for the link, i will need to give this a thorough read. I understand why most investing advice is conservative and I do plan on having most of my money in those strategies, but I've always thought there must also exist some relatively simple but informed methods for those with higher risk appetites


"Despite the minimalist appearance"

As time goes on, a site remaining minimalist like this is a good indicator of value. I'll never understand the desire to move away from high density UX like this to the modern web junk UX that looks more appealing but makes everything more convoluted.


Agreed! After all, look where we are posting :)

What I was trying to say, but didn't have the space to fully articulate, was that it can look a little noisy and random at first glance. As I write this some of the top threads include posts about replacing a toilet valve, herbicide use, and motivating a son in law. Once you filter through some of this though there are a lot of really smart people giving pretty good financial advice.


Bogleheads is a great resource, and I've used it to learn a lot about investing. However, they tend to be really conservative about investments. I think after reading their wiki, it's important to asses personal risk tolerance and determine your portfolio from there.

Writing an investment policy statement is something bogleheads recommend doing which I would suggest as well. The statement helps guide investment decisions based on goals you wish to achieve.

The most important part of investing is staying the course. Staying the course is hard in bad markets like 2008 or during the pandemic which is why accurately assessing your risk tolerance is so important.


Why isn't the tl;dr:

1. put 6 months of expenses in a high-yield savings account that is easily accessible + liquid in case of emergencies

2. max out tax-advantaged accounts. $19.5k/yr 401k + $6k/yr IRA. allocate into anything similar to a target date retirement fund with healthy exposure to US total market/probably light bonds depending on age

3. put the rest in a brokerage account, allocated in the same things your 401k + IRA are allocated in (target date retirement funds that track things similar to VOO/SPY/VTI/FZROX/etc.)


That's good retirement planning advice for normal situations. Having a $450k cash windfall adds a few wrinkles -- there are more investment options available (e.g. buy a house with cash), and the tax consequences of those various options can be very different.

I don't think most people need a financial advisor, but if I had a $450k pile of cash and I wanted to understand the tax consequences of various investments I would definitely pay for a consultation.


For what it's worth, at 2.675% interest on a 30-year fixed, buying a house in cash makes very little sense, and a mortgage can counterintuitively earn you money.

1. In general, since the 1970s, house prices have across the United States tracked inflation. The price per square foot on a house, on average, is exactly the same as it was back then (houses are more expensive because the average US house has gotten bigger, and in some metros like SF, city councils have flatly refused to allow building to buff up house prices).

2. A mortgage is basically free when you discount inflation and deduct the interest. The fed target for in the US is roughly 2%. This means that a 2% interest mortgage is free money, i.e. while you pay a 2% interest rate, the principal is worth 2% less, as you get to pay off the 2020 house price using 2021 dollars. So a 2.675% APR mortgage has an effective cost of 0.675%.

3. If you're working you get to deduct the entire 2.675% (of the first $750,000 in mortgage), so you get back up to 45% of it if you're in the top tax bracket. As such, the effective interest rate discounting inflation and interest tax deduction is negative, -0.53% APR.

4. On top of the interest rate on a 30-year fixed being effectively negative (i.e. generating value), you can invest the other 80% of $450,000. You should have no trouble generating 7% per year on that $360,000.

5. In aggregate, your return on capital by making a 20% down-payment on a $450,000 house at 2.675% APR in the top tax bracket could easily be ((0.53% + 7%) * $360,000) per year, plus your house should appreciate in value at inflation, but because it's a 5X leveraged investment, you're generating (2% * $450,000) per year on a $90,000 down-payment.

So, your total return could be:

1. $90,000 @ 10% + $360,000 @ 7.53% or...

2. $450,000 @ 2%.

Given the lack of fees or penalties for pre-payment, you can always pull the ripcord if your situation no longer makes sense by just paying it off.


With the new tax laws the home mortgage deduction is useless for most people. If you are married filing jointly, the standard deduction is $24000. I paid around $10K in interest last year on a $330K mortgage in its fourth year.


If you have no other deductions, you need to max SALT at $10k and owe about $450k on a 3% mortgage before itemizing is worth it


Good to know, thanks! I’ve always itemized in the past.


1. homeowner's insurance

2. homeowner's associate fees

3. property taxes

4. maintenance/upkeep

don't those cut into your "compare a house to investing in index funds" example?


Indeed although you own the house in both cases right, so you can factor that out when making the comparison. It'll impact your total returns equally in both cases, unless I'm misunderstanding you?


On average this analysis makes sense but cash flow is also important to consider. If the thing you’re investing in to get 7% doesn’t make payments, or has a single bad year and doesn’t yield like it’s supposed to, you could be up the creek.


Indeed, I was basing the 7% return on the S&P hence assuming liquidity in the investment. Liquidity matters and, yeah, YMMV. Still works if you invest in CDs instead but it’s not nearly as attractive.


I think you should mention the higher risk exposure from having so much liability tied up in a single asset if the house loses value.

Also, why is option 2 @2%? If you're investing the $360k at 7%, you should compare it to the same investment at 7%.


Option 1 is a 20% down payment on a $450K mortgage, so a $90K down-payment (10% yield) and a $360K investment in the market (7%) and a $360K mortgage (0.53%).

Option 2 is a $450K cash purchase of a house, which, on average, appreciates at the fed target inflation rate of 2%.

Indeed although in both cases you own the home and are subject to the same depreciation risk right? Although if you're willing to take a credit hit, I suppose you're shifting that depreciation onto the bank.


> I don't think most people need a financial advisor, but if I had a $450k pile of cash and I wanted to understand the tax consequences of various investments I would definitely pay for a consultation.

I think you have to be a little careful with this.

Shockingly, most financial professionals do not have a fiduciary duty to their clients. If you pay for advice, I'd definitely recommend getting one that does have a fiduciary duty to their clients.


Indeed, the Trump administration rolled-back an Obama era rule that financial advisors must be fiduciaries. I'm not sure most people realized that happened.


Sorry if that came off as political, I mentioned the leadership at the time as epoch markers as I didn't recall off-hand the specific dates. I suspect people didn't realize that the fiduciary rule wasn't a thing prior to 2015, let alone that it was over by 2018, and it is my understanding the Trump administration was looking at resurrecting the rule.

[1] https://www.nytimes.com/2018/06/22/your-money/fiduciary-rule...


Vanguard also offers "Tax-managed" funds which have significantly less yield/distributions compared to corresponding index funds [1].

[1] https://www.bogleheads.org/wiki/Tax-managed_fund_comparison


The choice between regular and tax-managed funds, and also the choice between regular and tax-exempt bonds, is not straightforward.

There are quite a few caveats in that wiki article, e.g. stuff like this:

> Your actual tax cost will be higher if you owe state taxes (add your state tax rate on the dividend yield, reduced by your federal tax rate if you itemize deductions and are not over the limit for deducting state taxes) or are in the phase-out range for some tax benefit such as the child tax credit (add 5% to all tax rates) or the personal exemption phase-out for the Alternative Minimum Tax (add 7% to all tax rates, but your overall tax on non-qualified dividends is 28%).

That's a bit complicated. I would still recommend paying for at least a one-time consultation with a financial and/or tax advisor before choosing where to put $450k.


Given the current tax rates vs reasonably projected future tax rates, I'd be quite inclined to put money into a Roth 401(k)/IRA than a traditional. I'd rather lock in today's rates than take exposure to 2040, 2050, or 2060 rates.


I'd expand upon the emergency fund. I always feel when someone just says "put X in an emergency fund" and leaves it at that, they're missing the big picture of emergency planning. Emergencies can be long, slow burns, they can be short and acute, they can involve lack of access to financial institutions. I like to keep different tranches of emergency assets set aside for different kinds emergencies:

1. Something like Series I bonds for long-term future economic downturns or inflation

2. A CD ladder or money market for temporary job loss

3. Cash in a mattress and food/water for natural disasters

4. Guns, ammo, and containers of gasoline for the zombie apocalypse.

Weight each tranche by your assessment of each event's probability. You diversify the rest of your portfolio, why not diversify your emergency fund?


I would add that if your employer allows for mega-backdoor, do that too.


Looking over the wiki so far, looks like a great resource. Thank you!


> I'm not comfortable investing the entirety into an index fund, given the current socio-political climate.

Over the the long term there is not really anything better to do with it than equities: the Great Depression, World War 2, gold standard retirement, 1980s inflation, etc. Even if you only invested in the peaks, you'd still do quite well over the decades:

* https://awealthofcommonsense.com/2014/02/worlds-worst-market...

Jumping in with a lump sum amount can be quite daunting, so what you can do instead is put in (say) 40K every month over the course of a year or so:

* https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...

Certainly better than sitting in cash. If you're worried about volatility, then also invest in some bonds funds: 60% stocks, 40% bonds? If you want more growth, 70/30 or 80/20 maybe.

And while the S&P 500 gets a lot of the press, a total market fund is what Vanguard is steering their own employees to:

* https://www.marketwatch.com/story/bogle-explains-why-vanguar...

See also:

* https://www.pwlcapital.com/should-you-invest-in-the-sp-500-i...


I agree with the (downvoted) guy who said, I'm an index fund skeptic.

Something is true with index funds that was less true historically, which is the concentration of a few large companies in the largest indexes - as in, the amount of percentage of capital they have. Fact, FAANG make up 10% of the s&p 500 index, tech makes up 20+ %. It's NOT at all averaged out in the way the Bogleheads might think it is. Is it a "bet on the economy," or is it a bet on the stocks of big tech?

Which brings me to something else that appears to have changed: big tech stocks are viewed as a safe haven, increasingly. With the overall economy being in a shambles combined with a virtual work world, this is even more important.

Put those two things together, and the S&P 500 index isn't diversified.

Edit: we're at the top of the cycle right now, or so it seems. We're all waiting for the other shoe to drop.

But it's worse. What happens if you stick everything in there, you need the money in 5 or 10 years and you just hit the bad part of the cycle (look what happened in March).

I'm doing the opposite of what the Bogleheads do, even though I'm extremely familiar with this extremely conservative approach. What's the fun in risking my capital with some index fund that's tied to concentrated entities like that, when I can risk a small percentage of my capital on highly volatile stocks, and make a similar return? You can repeatedly swing trade stocks like SPCE and some of the biopharma stocks and make money over and over again with a tiny percentage of your capital.

I'm more interested in understanding how the bond market will work now in this strange new reality. Are bonds not a safe haven place to park cash?


Why do you think an index that is 20% tech stocks "isn't diversified"? The S&P 500 has had more than 20% in several different sectors over its history, from transport to energy to communications. With indexing, you have whatever investments are worth making in the current economy. You don't have to predict the trends or decide what's overinvested in.


You're conflating index funds with S&P 500 Index funds, though. You can buy an index fund with _zero_ tech stocks. You can buy something like VINIX which has considerably less weight on the BigN tech firms.


The VINIX is down 3% YTD while the rest of the market ballooned.

Looks like we "picked stocks" by picking the indexes here, too?

I just don't understand the insistence on indexes. We're afraid of picking stocks that go bankrupt?

We work in tech, and a lot of us are science nerds. Surely we can pick names based on how we think those technologies are likely to be successful. We have access to a lot more information than people did in the 1990's with this Boglehead stuff.


Well, yeah, that's absolutely expected. The promise of index funds isn't "you'll always make money!!" over any short-term period, the promise is that if the stock market as a whole increase, which it tends to do, you'll also benefit from that.

>Surely we can pick names based on how we think those technologies are likely to be successful.

Time and time again, especially now, "fundamentals" has proven to be a poor predictor, at least in the short term. You have companies with P/E ratios of 20-30 right now.

It's not just about the underlying product, perception and all kinds of human effects also matter, which makes it a perilous place to be.

Throw your money in a big bucket and over 20-30 years, you'll be up. That's the point.


Fine, over 20-30 years. I'll be too old in 20-30 years to enjoy that money. I'd rather swing trade and buy myself a new couch. :-)


Founder here - can I have your old one?


If you're looking at YTD% on an index fund during a pandemic, you have the wrong mindset IMO


That's a matter of opinion, wrong mindset. I bought gold miners that ballooned, and swing traded pharma. This turned into money that I can use to buy things like computers and furniture. Or buy even more of the fabled broad index funds.


Which platform do you use, if you don't mind me asking?


Vanguard and Schwab, with an increase move of capital to Schwab. They allow more advanced trading like options (no, I'm not that crazy - yet), shorting, buying and selling in the same day, etc, that Vanguard doesn't even support. Also, there's a downloadable web client that lets you create complex If Then type conditions, as well as aggregate news and customize dashboards and a bunch of other stuff.

I'm not that active trading, maybe I perform an action once every one to two weeks. I spend almost all my time just trying to absorb information.

Honestly, with all my questioning of index funds and contrarianism in comments above, I am slightly skeptical that the average person should have this much access to these types of tools. I could instantly blow away all my money and be left in debt (given they allow margin).


Where did you learn swing trading?


It's not about the amount of information you have, it's about the amount you have _relative to other investors_. In the era of algorithmic trading where companies are spending millions to get information milliseconds faster, the extra information you have by working in tech and being a science nerd is meaningless.


I highly suggest following /r/wallstreetbets for any length of time. If you see a "great deal" put in a reddit remindme and go back and figure out your "gains". You'll quickly realize stock picking with all the "better information" we have today means every other single investor has the same info. It's a madhouse of everyone seeing the same things and rushing for it, but you're doing it with Robinhood with delays and the big players have hardline terminals a dozen feet from the stock exchange.


S&P500 is also picking stock. Something like MSCI World is considerably less so.


MSCI World is also basically the top stocks from the top economies. If you want exposure to, for example, developing markets, you have to explicitly put your money into a developing market ETF. And even then, many of them have outsized holdings in a few big Chinese companies.


If the market is efficient, why is (infrequent) stock picking so much worse than buying an index fund?


The market being efficient means individual stock you picked is priced currently, but you're foregoing the benefit of diversification.


Psychological reasons. Retail traders performance chase, selling things when they have temporary (multi-year) losses and buy when they have temporary high gains. It's incredible how strong it is even for people who are somewhat knowledgeable about finance like Bogleheads. It's also been studied by Jack Bogle himself. There was a famous study comparing Value vs. Growth stocks he noted where retail traders who invested based off either ended up doing worse than just holding both because in aggregate they kept buying the one that recently did well and then selling it when it had done poor. Buy high, sell low.


The highest gains are also only available for a few days in the year. If there are three really good days for a stock then you're going to hit all of them if you hold it for the entire year. If you buy and sell shortly after you might miss all of them.


Interesting that no one talked about green or socially responsible index yet.


>" It's NOT at all averaged out in the way the Bogleheads might think it is."

Correct. There are smart people doing research out there right now demonstrating that "passive" isn't really passive, and that people regularly buying into indices at any price is skewing the market.

No one is clear on what the ramifications of this are, but as the old adage says, "past performance no guarantee of future success". The same goes for buying the SPY and forgetting about it.


> […] and that people regularly buying into indices at any price is skewing the market.

And at what price should people be investing in the market? Sitting on the side in cash, waiting for the dips and crashes to occur, will give you mediocre results:

* https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...

Further, trying to miss the worst days on market down turns often means missing the days with the best returns:

* https://theirrelevantinvestor.com/2019/02/08/miss-the-worst-...

For most people, most of the time, the best thing they can do is just chug along putting a little bit of money away every month. Put in what you can, but a good goal (if you can afford it) is to put away at least 5% of your income (and maybe up to 10%).

> The same goes for buying the SPY and forgetting about it.

You're not wrong, but: what's the alternative? Unless you can show something that's demonstratively better than a low-fee S&P 500 or Russell 3000 index fund (perhaps tempered with some bonds for risk/volatility management), bemoaning the situation is not very productive.


I'm also an index fund skeptic mainly because it's now such a convention that taxi drivers and shoeshine boys will tell you that's where you should put your money. People used to say the same things about investing in real estate and many other things and for a time in history those things were demonstrably the best investment long term, until it wasn't. It looks like now is that time again for the stock market to look good. It still doesn't mean it's a bad investment either and no one will blame you if you suffer with everyone else when it goes wrong. However, it's also never worth putting all your money into unless you can afford to ride through a slump that could last well over a decade.


The historic worst case for the inflation-adjusted S&P 500 is not being up from 1929 - 1987 - 58 years. https://www.macrotrends.net/2324/sp-500-historical-chart-dat...

Edit: This ignores dividend reinvestment as ummonk noted. https://www.officialdata.org/us/stocks/s-p-500/1900 suggests 1929 - 1944 was probably the longest time.

We are in unprecedented times. Highest debt, lowest bond yields, crazy P/Es, historic GDP drop (worst since 1929, or since WW2 for some). We don't yet know how inflation/deflation will play out. CPI is useless. A lot "inflation" is going into real estate / land and the stock market.

I don't think past wisdom applies anymore. If you put money into most products (including most index funds) on the stock market today you are in fact stock-picking / gambling.

Also tech companies are partially up for a good reason. Small caps have lost a lot earnings power. https://twitter.com/NorthmanTrader/status/128335311697343283... Much much more than tech stocks. E.g. tech stocks were almost the only ones doing any buybacks last quarter. Stay-at-home companies, solid/value companies, and cheap stocks is where hedgefunds seem to move to. But yes, some valuations are bonkers. EV stocks, CVNA, W, ...

Personally, I've been late to the party, and needed to learn on the fly, BUT: I now own a portion of gold and royalty and streaming companies (mining exposure with less risk of badly run mining companies. They lend money to miners in return for metal. I.e. miners don't need to worry about the price of the metal.) Mind that GLD and SLV are not fully backed by gold and silver. There is significant counter-party risk (E.g. if the bank goes bankrupt you might not receive anything). They also haven't really been audited, and JP Morgan employees have been charged for price manipulation of metals.

I reduced my bond exposure, and I will probably soon move into gov bonds exclusively. I don't want to gamble on MBSs, CLOs, corporate bonds being bailed out. (The Fed and ECB's policies skew the bond market. Ratings and yields are (increasingly) not great indicators of company health). There is little room for lower yields. Real yields (bond yield - inflation) will turn negative or are already. When rates eventually will be hiked, both stocks and bonds will fall. (See 2019 / December 2019)

I started stock picking. Mainly value, but really random stuff I find on Youtube investment channels and Reddit (Of course I read up on them, listen to financial calls. Balance sheet. Cash flow. Exposure to potential problems.). I sleep better at night with a cheaper stock that has less downside, even if it isn't riding the current trend/bubble.

Other than that I'd keep a good amount of cash for potential opportunities. In the current climate, stocks could fall any week, real estate will likely be on sale (depending on how many rich people will try scoop it up at the same time), or perhaps you can buy a share in a local business.


I tend to agree with this and I'm also long several gold miners, and I've swing traded some of them (one was a value buy with a long-standing issue with the Greek government that I was watching the news on for years).

It baffles me how this Bogleheads philosophy has taken tech people. People can't wrap their heads around the idea that gold goes up in times of trouble, or that work from home tech is likely to go up, or that oil is likely to go down, or whatever other myriad bets one can make.

My approach is to maintain almost all cash and to trade a small percentage of the cash on extremely volatile stocks, preparing to hold long-term if necessary. I rarely invest in fully scammy pump and dumps (but lately pharma has paid off, for obvious reasons).

I use the news cycle and try to anticipate what others are doing. You don't need to sell at the top and buy at the bottom to make money.

In contrast, I'm looking at my work 401K which is managed with those mathemetically unstoppable index funds. It's down 2 percent while I'm up 30.

Now what am I to do with the cash portion of my investment. I'm leaning in bond funds (because bond picking is something I have no idea about).


How long do you think you can keep up the 30% returns? How many active investors/traders do you know have had 30% returns year after year? I think it is easy to lose sight of the long term possibilities when you are thinking about the short term.


I'm up 75% this year [0] by buying companies I like and holding them 'forever'. But if someone asks me for investing advice I'll still tell them to go for index funds.

Because while I might be lucky enough to trounce the market right now, that doesn't mean I'll trust anyone to pick the right companies. It's safer to go for average returns than to risk the market trouncing you, especially with the vast majority of your wealth. And no, this etoro account is not my main investment account.

[0] https://www.etoro.com/people/neversell/stats


I'm happy you've been beating index funds and hope you can keep that streak going. Have you considered the opportunity cost of spending time researching and picking stocks though? You don't just need to beat index funds, you need to beat index funds plus whatever you could earn by spending that time on something else.


How many years have you been doing this?


I think that worst case looks worse than it was because it is ignoring dividends.


Good point. I found this here: https://www.officialdata.org/us/stocks/s-p-500/1900 1929 - 1944 seems to be the worst.


Any examples of those mining lenders you mentioned?


I like GDX as it contains both these and miners. FNV, WPM, SAND. There should be a lot more. The problem is that they are already extremely pricy. All gold related stocks had quite the ralley in 2020.


> Something is true with index funds that was less true historically, which is the concentration of a few large companies in the largest indexes

Which is to say, exactly like has been for the last several decades:

* https://awealthofcommonsense.com/2020/07/the-nifty-fifty-and...

* https://theirrelevantinvestor.com/2018/11/26/the-nifty-fifty...

* https://en.wikipedia.org/wiki/Nifty_Fifty

* https://etfdb.com/history-of-the-s-and-p-500/

* https://www.qad.com/blog/2019/10/sp-500-companies-over-time

That's the definition of the S&P 500: the largest five hundred companies publicly traded companies.

> Fact, FAANG make up 10% of the s&p 500 index, tech makes up 20+ %. It's NOT at all averaged out in the way the Bogleheads might think it is.

Why do you fixate on the S&P 500? If you want something more diversified, you can own a piece of all ~3000 publicly traded companies in the US:

* https://en.wikipedia.org/wiki/Russell_3000_Index

John Bogle and Vanguard themselves recognize(d) this:

* https://www.marketwatch.com/story/vanguard-thinks-its-own-em...

* https://www.marketwatch.com/story/bogle-explains-why-vanguar...

And many Bogleheads also examine the performance of many different types of indexes:

* https://www.bogleheads.org/wiki/US_total_market_index_return...

> Put those two things together, and the S&P 500 index isn't diversified.

You're not wrong, but trying to explain to the layman about all this technical minutiae will cause their eyes to glaze over. So for the average Joe the Plumber the easiest message to get across is "invest in 'index fund' (=S&P 500)". Once you get people to actually save on a regular/monthly basis in low-fee funds, you're >80% of the way to a somewhat successful retirement strategy.

If you want to argue about &P 500 vs 400 vs 600 vs 1500 vs Russell 3000: that's for later once people actually have something going into a retirement account.


There's also a possibility of (hyper) inflation. I would buy certain hand picked large stocks, Bitcoin, gold and Fx.


There is one way you can beat dollar-cost averaging when you're investing large lump sums like this. Selling cash-covered put options until you get assigned. This is the only strategy that has proven to outperform buying and holding. The reason is obvious: you're buying at a discount if you get assigned, and you get to keep the premium if you don’t. Selling a put is basically being paid to put in a limit order.


Why do you think this is true?

$PUTW is an ETF that implements the strategy and it has not done well in recent years.


I realized I didn't reply specifically to your question about why $PUTW ticker price looks the way it does.

"The strategy is designed to receive a premium from the option buyer by selling a sequence of one-month, at-the-money, S&P 500 Index puts (SPX puts). If, however, the value of the S&P 500 Index falls below the SPX Put’s strike price, the option finishes in-the-money and the Fund pays the buyer the difference between the strike price and the value of the S&P 500 Index." [1]

They aren't selling puts to open a position, they're selling SPX puts. SPX is a cash-settled, European-style option derivative product tracking the S&P index at a notional value of $100 per index point. When they get assigned because their position closes in the money, they write a check, instead of taking delivery of shares they bought at a discount and waiting for a recovery.

So what this ETF tracks is basically the spread between realized and implied volatility. When the implied volatility is higher than the realized volatility -- which is most of the time -- it tends to be a little bit lower. When the realized volatility is higher than the implied volatility -- which tends to only happen during dramatic market moves -- it tends to be a lot higher.

If you zoom out, they basically go up nice and smooth, until a major market event hits, then they get practically wiped out. Then they start recovering again.

If you sell puts with the goal of getting assigned on the underlying, and riding it back up, you actually want to get assigned at some point. These folks instead cut a check for their losses, don't take delivery of anything they bought at a discount, and start selling premium again, hoping the premium will make up for their losses. Doesn't look like a winning strategy huh?

tl;dr: $PUTW does not use the strategy I suggest. Did that address your question?

[1] https://www.wisdomtree.com/etfs/alternative/putw


To clarify, using put sells to enter into a position that you would otherwise have opened, today, to hold long-term with a is generally better than a market or limit order. As an income-generation strategy, selling put options is, on average, a moneymaker so long as realized volatility remains lower than implied volatility. That is typically the case, but of course, March flipped that on its head, and there's no "one" strategy.

If you would have otherwise bought 100 shares of SPY on Friday, it would cost you $326.52 (x100, so $32650). If you sell 1 put option expiring 8/31 "at the money" (i.e. a $326P) you will receive a net credit of $7.20 per share today ($720).

That money is yours at the moment you sell the put option, so if SPY closes at or above $326 on 8/31 (excluding early expiry), you've made $720 on $32600, or a one-month gain of 2.2%. That is an annualized return on your staked capital of 29%. You can then keep making an annualized 29% return every month until you get assigned (assuming IV rank remains stable).

Alternatively, if SPY closes below $326, you've actually bought it for a $7.72 per share discount ($7.20 + $0.56), or $318.80 over what it's trading at right now. As you plan to buy and hold for the long run, you got a much better entry price than you would have with a market order.

If you're planning to buy and hold today, it's hard to lose with selling a put to open. You either collect a nice premium, or you buy the shares at a discount. If your goal is to own the shares long term, you're feeling good either way. Make sense?

What you could theoretically miss out on is a big run up from the moment you bought the shares in excess of the premium.

You can get more aggressive too, and sell puts you don't think you'll get assigned on, at the highest price you'd be willing to pay for SPY and play the long game. Sell $300 8/31 puts for $2. There's a 80% chance you'll keep that premium, and it's an annualized 8.2% return on staked capital. Then if you get assigned it's actually a $28/share discount -- 8.5% -- below today's price.


Stock indexes over the long term are a function of Corporate profits of the large companies and the inflationary nature of the economy, especially over the last 30 years, the willingness of the Federal reserve to print money (create debt). Without restraint nowadays.

For instance, in 2020, the massive stimulus by the Fed almost certainly will create a rising stock market. It deviates of course in the short term 6-18 months, few years etc.. In short, if you go that route, buy on the 1-2 year dips.

Invest would certainly be the way to go, although if you have a certain talent.. For instance, house flipping or starting a business. You can get better than the 5% or whatever you get after inflation in stocks. If you're really good at what you do, your odds of getting a better return go up.


> the willingness of the Federal reserve to print money (create debt). Without restraint nowadays.

Ben Felix, a portfolio manager at PWL Capital in Canada, just released a video explaining why this is completely wrong:

* https://www.youtube.com/watch?v=K3lP3BhvnSo

> Quantitative easing is a monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity. But what exactly does that mean? In today’s episode, Benjamin and Cameron are going to address this topic, avoiding highly politicized aspects, like whether or not central banks should be involved in the economy in the first place, and focusing purely on the operational perspective of quantitative easing – what is it, how it works, and what the intended transmission mechanisms are.

* https://rationalreminder.ca/podcast/109

> For instance, house flipping or starting a business. You can get better than the 5% or whatever you get after inflation in stocks. If you're really good at what you do, your odds of getting a better return go up.

That's nice if you want a different/second career or something. But there are those of us who are happy with our careers/jobs, and simply want something to do with our retirement savings… ain't nobody got time for that.

Of course the half-life on any new business is quite abysmal, so I'm not crazy/ambitious enough to take on that kind of risk.


He might mean debt monetization. When the Fed buys treasuries. I think the video didn't touch on that. M2 money supply changes nicely correlate with S&P500 performance. So there is truth to his statement.

I'd also throw out the assumption that the Fed will reduce the balance sheet eventually. They tried and failed in 2019. It's not going to happen. They are in fact "spending" (through the Treasury and their bond-buying programs), even though Powell likes to say that the Fed doesn't have spending power, but has lending powers.


> They tried and failed in 2019.

That's because COVID-19 happened. :)

The Fed is buying up bonds: at some point they will mature and the US government will have to either (a) increases taxes to come up with the money to repay them (thus taking money out of circulation via the IRS), or (b) roll the debt forward by issuing new debt to pay the old debt.

Given that a few years ago the UK rolled forward some debt from the South Sea Bubble, Napoleonic Wars, WW1, etc, rolling forward debt is not as big a deal as most people think:

* https://www.theguardian.com/business/blog/2014/oct/31/paying...

* https://www.nytimes.com/2014/12/28/world/that-debt-from-1720...


They lowered the rates for corona, but they expanded the balance sheet for that overnight lending rate spike before that.


The balance sheet can only be reduced during times of inflation. I think everyone can agree that we are far away from that.


> the willingness of the Federal reserve to print money (create debt). Without restraint nowadays

> Quantitative easing is a monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity

You implied this would be wrong, but it looks exactly right. Nobody is confused about how this works, which is why you response is just puzzling.

> (b) roll the debt forward by issuing new debt to pay the old debt.

There's no question as to what happens here (a) vs (b) false choice. It's printed money that is accounted for as new debt, as per the original assertion.


> Even if you only invested in the peaks, you'd still do quite well over the decades:

This is not true for a 10 years period though

https://www.vizlit.com/finance/2020/07/01/sp-performance.htm...

You might to add that even though in the past economic growth has always been the case, it doesn't mean it will always be the case, especially now that the energy consumption more or less reached a peak


> This is not true for a 10 years period though

That's for the S&P 500. How would have a portfolio using (say) the Russell 3000 have done? How about adding some international/EM component? What about a portfolio wish some bonds to control for volatility and allow for rebalancing?

That is to say: does diversification help?


> This is not true for a 10 years period though

It was true in this ten-year period (2000-2009) if you rebalanced between VFINX (S&P) and VBMFX (bonds):

* https://www.forbes.com/sites/investor/2010/12/17/the-lost-de...


I'm an index fund skeptic. What would happen in a world where everyone invested in index funds? Capital allocation would go haywire. You can't create value out of nothing. ISTM that the more people push on index funds, the more overvalued equities in the index become relative to those outside the index. I'm not sure that retrospective analysis saying index funds are the best applies going forward in a world where index funds are much more popular than they were in the past.


Obviously not “everyone” will ever invest in index funds. HFT firms, leveraged buyout folks, and prop traders at investment banks aren’t going to stop betting on individual securities. The people who have more information, quicker ability to act on information, or superior ability to analyze information shouldn’t buy index funds (they’re also the people who contribute meaningfully to price discovery).

A smart individual retail investor is statistically unlikely to “beat” those people, and should buy index funds.


I hear this over and over again. Beating the HFT firms, insiders, big money shops and so forth.

It's not a zero sum game necessarily. A stock picker approach that you have as a retail investor that many trading shops do not have is this: time. You can make your bet, and if it fails in the short term you can hold onto the stock long term, unless the company is going bankrupt (which hasn't been a common occurrence up to now, given the overall number of stock symbols). Traders are individuals and groups with books, quarterly numbers to meet and yearly returns to care about. They'll beat you if you're a day trader, sure, but I think it's a false dichotomy to say, you're either a) a day trader or b) a boglehead.


> It's not a zero sum game necessarily.

It is, actually. William F. Sharpe laid it out in the 1991 paper "The Arithmetic of Active Management":

* https://web.stanford.edu/~wfsharpe/art/active/active.htm

* https://www.jstor.org/stable/4479386?seq=1

Sharpe won the 1990 Economics Nobel for other work:

* https://en.wikipedia.org/wiki/William_F._Sharpe

The more active a trader is, over a longer time frame, the more likely they are to underperform the market. This has been shown through SPIVA over 15+ years, at least in the US and Canada:

* https://www.tma-invest.com/spiva-data-reveals-15-years-of-ac...

* https://www.ifa.com/articles/despite_brief_reprieve_2018_spi...

As of the end of 2019, internationally active managers didn't do too well either:

* https://dividendstrategy.ca/what-is-spiva/

This has been known to varying degrees since at least the 1970s:

* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street


That can't possibly be true in the limit though. A market with no active management would allocate capital arbitrarily, without an eye to returns. A company burning money on making millions of unwanted skunk-scented bouncy balls would be as likely to attract capital as one that made, say, food or medicine. Resource allocation would break down if nobody made active capital allocation decisions.

The question is how high the share of passive investment can go before we see misallocation.


> A market with no active management would allocate capital arbitrarily, without an eye to returns.

I recommend you read up on the following (from me elsewhere on this topic):

> So what would happen if the majority of investors started to buy the market and stopped trying to beat the market?

> Mispricings would start to develop regularly, and the people that had continued to try and pick stocks would be able to profit. The profits that these people made would attract other people, and eventually everyone would return to chasing the dream of beating the market. Behavioral finance plays a huge role in market efficiency; nobody wants to accept being average by taking what the market gives them when there are hot shot managers that promise to consistently beat their benchmark. There is a lot more emotional attraction to investing with the guy, or to being the guy that can beat the market.

* https://www.pwlcapital.com/the-grosman-stiglitz-paradox/

* https://en.wikipedia.org/wiki/Grossman-Stiglitz_Paradox


The GP isn't disagreeing with you. They just said in the limit that all investment couldn't be passive. There is probably some equilibrium value between active/passive investment.


Yes, and what the article I posted is saying is that even if all investment was passive at some point, people would would jump from passive-to-active if/when pricing irregularities were noticed.

The concern that passive/index investing will ruin The Market is just not something we need to worry about.

Jack Bogle made the claim that even if 90% of the market went passive, the remaining 10% would probably be enough to keep things going:

* https://www.forbes.com/sites/greatspeculations/2019/02/12/a-...

* https://www.ft.com/content/4594f554-ba1a-11e7-9bfb-4a9c83ffa...

I'm less worried about the issue of market and price efficiencies, and more about shareholder votes and company management decisions. How do passive, potentially 'non-opinionated' index funds vote on various measures?


Yes, and not only that, but the index funds a skewed towards entities with large market caps.

Someone could make their own "index fund" with 10% of it allocated to FAANG, maybe 20% of it in the largest tech names overall, and then a distribution of the largest market cap names, and lo and behold, one has an s&p 500 "index fund". Tesla's about to be added to the S&P 500. There are strong opinions on both sides - it's going up, no, it's going down. You don't have much of a choice if you're a Boglehead who bought into the S&P 500, you're just in it for the ride.


> Yes, and not only that, but the index funds a skewed towards entities with large market caps.

There are index funds of every publicly traded company in the US:

* https://en.wikipedia.org/wiki/Russell_3000_Index

Vanguard themselves have changed things so that employees no longer have the option of choosing the S&P 500 fund in their own retirement accounts, but rather the Total Market fund:

* https://www.marketwatch.com/story/vanguard-thinks-its-own-em...

* https://www.marketwatch.com/story/bogle-explains-why-vanguar...

> You don't have much of a choice if you're a Boglehead who bought into the S&P 500, you're just in it for the ride.

Anyone investing in equities is just in it for the ride, as it is impossible to predict what will happen:

* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street

An individual's best bet, long term: buy as much of 'The Market' as you can. The greater, the better. The S&P 500 is simply a smaller portion of the market, and while not bad, may not be ideal:

* https://www.pwlcapital.com/should-you-invest-in-the-sp-500-i...


>Anyone investing in equities is just in it for the ride, as it is impossible to predict what will happen

So people like Jim Simons are merely the luckiest people alive?

The average person earns the average market return, less fees; that's a tautology. Unless you have some reason to believe you aren't average, most people are better off following your advice. It's what I do, personally.

But the idea that no one is winning at this game flies in the face of a lot of evidence.


> So people like Jim Simons are merely the luckiest people alive?

No one reasonable, not even Fama and French who came up with the Efficient Market Hypothesis, claim that the market is 100% efficient.

And given that no one knows anything about Jim Simon's Medallion Fund, we actually have no idea how successful they are. But given the quantities and/or trading volumes possibly involved, they don't have to be right very often.

In a perfectly efficient market, it's 50/50 whether you'll get the better end of the deal. Now think of a casino: for many games the house's edge is only 1.5% (e.g. blackjack, baccarat, three-card poker).

* https://www.gambling.com/ca/online-casinos/strategy/10-casin...

* https://wizardofodds.com/gambling/house-edge/

But that's still enough for a casino to make make money.

It may be the Simons et co have just an edge of a few percent points, but they make up their profit on volume.

> But the idea that no one is winning at this game flies in the face of a lot of evidence.

There are plenty of people that are winning. It's just the people that win one year rarely win a few years in a row (never mind 10+):

* https://www.tma-invest.com/spiva-data-reveals-15-years-of-ac...

* https://dividendstrategy.ca/what-is-spiva/


There's always someone out of approx. 1 million who will flip a coin heads 20 times in a row. The guy who does is always the poster boy for active management. You can (of course only after the fact) interview him, ask him how he thinks he became such a good coin flipper, and read investment books about him, or just passively invest and accept market returns.


Index funds are strongly a momentum investment strategy. I don’t see this appreciated so often.

But of course, a properly diversified index fund portfolio contains much more than just the S&P500. Mine has some thousand global stocks, on the order of 5000.


Yeah, one of the oddest arguments I see from EMH pumpers is "dude, just by SPY, you can't beat the market".

SPY is hardly diversified. A far better and pretty easy portfolio consists of a global financial assets allocation: US stocks and bonds, developed world ex-US stocks and bonds, emerging markets stocks and bonds, real estate and commodities. 10-12 ETFs will do it.


There is a weird argument by one of the commenters further up. Index funds are too risky because are not diversified enough and mostly focus on tech companies (mostly wrong). Why not buy 5000 stocks individually? Who is going to pick 5000 stocks by hand?


I'm not sure why you assume that people are forced to engage in passive investment. You can conjure arbitrarily high percentages but they are ultimately meaningless if they don't happen in reality.


I'm happy to go through these in some depth, but the most obvious first response to this is, 1991... Is the landscape of 1991 the same as the landscape of 2020, with its 10% of the s&p in just a few companies, with Robin Hood kids, with money printing, with Seeking Alpha and information overload? Talk shows about stocks and news algorithms pumping stocks to the masses?

Some of your links are for active fund managers versus passive fund managers. Again, a red herring. No, there's not JUST a choice between bogleheading and day trading, and none of us here are active fund managers? Are fund managers (who have clients) compared to the likes of you and me ?

Some individual stocks you buy for the long term, others you trade short term. And sometimes, you can long a stock but only trade a percentage of the holding. You can keep it for a day or for years.


> Is the landscape of 1991 the same as the landscape of 2020, with its 10% of the s&p in just a few companies

Yes, it is the same:

* https://awealthofcommonsense.com/2020/07/the-nifty-fifty-and...

* https://theirrelevantinvestor.com/2018/11/26/the-nifty-fifty...

* https://en.wikipedia.org/wiki/Nifty_Fifty

* https://etfdb.com/history-of-the-s-and-p-500/

* https://www.qad.com/blog/2019/10/sp-500-companies-over-time

That's the definition of the S&P 500: the largest five hundred companies publicly traded companies.

> with money printing,

I do not think this actually does what you thinks it does:

* https://www.youtube.com/watch?v=K3lP3BhvnSo

* https://rationalreminder.ca/podcast/109

> […] Talk shows about stocks and news algorithms pumping stocks to the masses?

Please see the 1990s and "irrational exuberance". I live in Canada: ask anyone here above a certain age (40s) about Nortel and Bre-X.

> Are fund managers (who have clients) compared to the likes of you and me ?

Fund managers have more resources than you and me, and thus probably have better information to base decisions on. Unless, of course, you are using satellite imagery in your investing workflow:

> Currie’s prediction proved correct. As word spread that satellite images were a reliable predictor of corporate profits, a range of investment funds began buying retail-traffic data from RS Metrics. In the following years, the company expanded, tracking not just parked cars but solar-panel installations, lumber inventory at sawmills, and the mining of metals worldwide.

* https://www.theatlantic.com/magazine/archive/2019/05/stock-v...


> ISTM that the more people push on index funds, the more overvalued equities in the index become relative to those outside the index.

What "index funds" are you referring to? The S&P 500? Dow Jones? NASDAQ 100?

If you purchase a Russell 3000 index fund you are purchasing a piece in every publicly traded company in the US:

* https://en.wikipedia.org/wiki/Russell_3000_Index

Any 'pricing irregularities' are discovered, then they will be pounced on any few remaining active investors. I recommend you read up on the following:

> So what would happen if the majority of investors started to buy the market and stopped trying to beat the market?

> Mispricings would start to develop regularly, and the people that had continued to try and pick stocks would be able to profit. The profits that these people made would attract other people, and eventually everyone would return to chasing the dream of beating the market. Behavioral finance plays a huge role in market efficiency; nobody wants to accept being average by taking what the market gives them when there are hot shot managers that promise to consistently beat their benchmark. There is a lot more emotional attraction to investing with the guy, or to being the guy that can beat the market.

* https://www.pwlcapital.com/the-grosman-stiglitz-paradox/

* https://en.wikipedia.org/wiki/Grossman-Stiglitz_Paradox


Not the op but I wish downvoters would comment giving their reasons. I remember seeing something about this in the atlantic a while back, and it would be good to know if/why it's a bad argument.


Not a downvoter (nor a financial expert) but to check the argument seems at least reasonable to check whether the proportional return of Vanguard funds has decreased as the fractional amount of money invested with them vs. the total stock market has increased. Seems unlikely the answer is yes (probably because in fact you are not investing in "nothing" -- there's value in having money itself, same as interest at a bank, and you are investing in giving that money to lots of companies, not just one, and that's what you're making profit off of. So long as money generates money, why should the return taper off?)

Probably an interesting number itself knowing what the fractional amount of money flowing through Vanguard is as a proportion of the total.


By purchasing stock (not at ipo/sep), you aren’t giving money to companies, you are buying the share from another entity.


I bet skeptics would say that if you steer people away from index funds, then they may put it in high fee active index funds that generate about the same return as the passive index funds.

Personally, I think that as more people put their money into index funds, active funds may look more attractive as they can potentially exploit market misprices quicker than passive funds can, but that's just me.


There's this weird social energy surrounding index funds that's very aggressive about preaching that they're the only viable option and that everything else is ridiculous. To be honest, this energy is another input that increases my skepticism of the whole thing. These days, whenever you see an argument downvoted instead of rebutted, there's likely something to it.


I think voting can mean different things to different people.

Some people upvote or downvote because they agree or disagree. They view it as a "vote" for the opinion.

Others upvote or downvote because they thing the argument is strong or weak, or maybe because someone said something nice and positive to another person or someone said something mean or hostile to another person.

I strongly favor the second approach.


I didn't downvote the earlier comment (and wouldn't as I'm quite clueless about financial matters), but felt the need to downvote another comment in an unrelated article recently. There I noticed, that once I applied the downvote, I couldn't see the comment being downvoted anymore. I meant to reply then to that comment on why I downvoted the comment, but couldn't anymore. I guess, that's the reason why one sees here so many downvotes by anonymous cowards.


Ever since Vanguard started there has been a constant barrage of anti index fund propaganda in the US.

One of the early slurs was that index funds were communism (pretty daft, but probably effective in the US). The latest is this scaremongering "what if all investment were into index funds" (answered several times in this thread).

From the perspective of index fund advocates, unsophisticated investors are systematically getting ripped off and the daft propaganda only adds to the offense.

This is probably why you're picking up an aggressive preachy vibe from advocates.

The empirical data is however unambiguous and there is now a lot of it.


Index funds allow amateurs to make money without losing it to "competent" active fund managers. That's all there is to it. You might not understand how many middlemen insert themselves between the amateurs because you're not one of them.


Your argument is exactly what Michael Green talks about [1]. The talk I linked is from January of this year and he basically predicted the exact crash we saw in February. Individual stocks were going up and down tracking the S&P 500 exactly, based on no news or any kind of information, just that they were in the S&P index. The price of the stock did not reflect the company's financials or outlook. We're about to see this when Tesla gets added to the S&P 500 - funds will be required to purchase Tesla stock at any price.

The reason that I'm personally an index fund skeptic is that I like to understand what I'm invested in. If you look through the S&P 500 members, there's dozens to hundreds of companies basically no one's ever heard of, and companies that I personally don't see a big future in. If index funds didn't exist, why would I take $100 of Fifth Third Bancorp or TechnipFMC when I could get $100 of Apple or Slack instead? The former is what you get when you invest in the S&P, while the latter are products I use everyday, and I feel that I understand how they make money.

If you hang around investing subreddits long enough, it starts to feel like everyone's parroting the same 5 sentences about expense ratios and diversification, with no analysis or critical thought put into what the actual investments are.

[1] https://youtu.be/x-rJciYZmi0


> If index funds didn't exist, why would I take $100 of Fifth Third Bancorp or TechnipFMC when I could get $100 of Apple or Slack instead?

Because you don't know which one will become the next Apple or Slack and will invest before they are valued as the next Apple or Slack benefiting from all their growth. Some of them will die, but the effect on the overall holdings will be small given their small size.


Because there are already hundreds of gatekeeper entities involved with getting a company listed.

You are basically investing in the idea that:

‘On average, these companies are run by people who want the company to succeed, and as long as the population of the world grows, and the middle class grows, this will make money’

Everyone could invest in index funds, and this would still be true, because if the stock price gets too low, it would be rational for the company to purchase its own stock on the cheap which would set the price floor.


That's a pretty poor argument. What would happen in a world where everyone invested actively? People would switch to index funds to beat them. In your world people would switch to active investing to beat the index funds.


While I don’t agree with your skepticism, there is a fund who goes off that theory that an S&P 500 index fund would become top weighted, or that the companies that have shown the most past growth are more heavily weighted, instead of focusing on future growth. It’s RSP, and it holds equal positions in all 500 companies equally.


currency != value


Relevant: Remembering John Bogle, patron saint of the amateur investor - https://www.economist.com/finance-and-economics/2019/01/21/r...


I hear this again and again, but something that went up throughout history is not a proof that it will continue to go up in our time. It's definitely highly likely, but it's not a certainty. A lot of people spread their investment in more than just the market to account for that.


Surprised not to see this mentioned anywhere. In finance, we don’t look at maximizing total return but rather risk adjusted return. Buying a lotto ticket has amazing total return if you hit the jackpot but really bad risk adjusted return.

The thing you should spend some time doing is deciding what your risk tolerance is and how much variance in your portfolio you can stomach. Then you can start talking investment strategies.


Ok so say I have enough risk tolerance to put my money in something other than cash, but not more aggressive than a fund that tracks the S&P, what precise steps should I do to live off of my cash stack while doing absolutely 0 work other than sitting on my couch?


> what precise steps should I do to live off of my cash stack while doing absolutely 0 work other than sitting on my couch?

I would put X% in Vanguard 500 Index Fund[1], and in Y% Vanguard Total International Bond Index Fund[2].

X% should represent the amount of money you can afford not to touch during the entire economic downturn.

Y% should represent the amount of money you want to be able to cash out at any point during the economic downturn.

Another alternative to S&P-500 for putting X% in is Nasdaq-100[3]. It has performed much better over the years, but it's significantly more tech-focused:

> The table below and the charts above display historical performance figures for both the Nasdaq-100 TR and the S&P 500 TR between Dec. 31, 2007 and June 30, 2020. Despite recent overall market volatility, the Nasdaq-100 TR Index has maintained cumulative total returns of approximately 2.5 times that of the S&P 500 TR Index.

[1] https://investor.vanguard.com/mutual-funds/profile/overview/...

[2] https://investor.vanguard.com/mutual-funds/profile/overview/...

[3] https://www.nasdaq.com/articles/when-performance-matters%3A-...


Why not the Vanguard Target Retirement 20xx Fund? Unless you really know how to assess your risk or manage a portfolio I think it’s what you are looking for.

(20xx is the year you should be retired)


Ordinarily, I'd say you want a product like Vanguard Managed Payout Fund. But they've just revamped them into the Vanguard Managed Allocation Fund (VPGDX): https://retirementincomejournal.com/article/vanguard-reboots...


If it’s all in the market, most wisdom says you can take out 4% a year and never run dry. Is 4% of your stash enough to live on? Congratulations you are financially independent. You can read through mr money mustache if you want more depth..


To be clear, the 4% rule assumes a 30 year retirement (i.e. retiring at ~50-60). For early retirement you should target a 3.5% annual withdrawal rate.

https://www.madfientist.com/safe-withdrawal-rate/


Exactly this. Put your cash in S&P500 and live a peaceful life. For optimization: take out a little bit more when the price is considered to be high and take out a little bit less if it's low.


Is this not timing the market? How do you calculate what is "high" and "low" - rolling average increasing 7% per year, compare current price to that expectation?


Mean reversion.

> Mean reversion in finance suggests that asset prices and historical returns eventually revert to their long-term mean or average levels

The avg. 7% per year will break down into very good years and bad years. Let's say the S&P500 is already down -5% YTD and has underperformed over recent years, then you would it considered to be low, because you would rather expect the performance to increase in order to match the long-term avg. of 7%. So at this point you would happily buy in and expect mean reversion. But of course there's no such thing as perfect timing (except in hindsight) and no guarantee for mean reversion to happen.


Timing the market is doable I'd say. Not all the time and not by everyone but it is completely doable. Sometimes you will buy too late or sell too early but even buying the dips is timing the market. If you partook in some stocks, more so than otherwise, during the March lows you were also timing the market.


The current risk free rate is absurdly low, which would suggest a much lower sustainable draw down than 4% for the next 10-30 years, probably only around .5 to 1.5% at most.


I agree the 4% rule is too aggressive nowadays. But every .25% increment lower means a huge improvement in sustainability, so even adjusting down to 3% is profoundly more conservative than the original rule. At 1.5% you are going lower even than endowment funds aiming for perpetual maintenance of principal (they often use 2%-2.5%).

The 4% rule of thumb was calculated to minimize risk of running out of money during the time period. 1.5% * 30 years = 45%, so an investment that simply keeps up with inflation would leave you with more than half your cash after 30 years.

And note that the stock market almost always has positive real returns over periods as long as 30 years (see William Bernstein’s book Deep Risk), so the assumption “just keeps up with inflation” is already very pessimistic.


You can take a 4% draw based on any 50 year period in the past 100 years. It is not risk free correct. There are many books and articles on the topic that are not worth trying to fit into a comment.

For most people, being able to retire and never work again with 95% certainty enough, especially when tweaking consumption and tweaking side income are easy knobs to turn. No reason to delay retirement 20 years to be 100% confident. Raises the risk a lot you just die before you retire.


That's rubbish that you think you can predict a 1% return in the market over the next couple decades. It would be extremely unprecedented, and you'd need a very solid argument to have any confidence at all in that prediction.


Not to mention SPY has a 1.75% dividend yield.


Well, inflation is also absurdly low. The direct return on equity, globally, is around 5% for a pure stock portfolio.

What is your basis for believing that the safe withdrawal rate will be less than half this, at less than 1.5%? That sounds excessively pessimistic to me.


Some of my money is in high-dividend ETFs. They have been returning between 5-10% over the past several years.


TL;DR: Interest rates don't just affect one side of thing. They are tied to all aspects of pricing.

That's very simplistic one-sided view of interest rates. If interest rates stay low or go lower, the stock prices will keep skyrocketing which balances the equation on the other side increasing your stock portfolio returns. The P/E capacity will be much higher than it is today in a perpetual low-interest-rate environment.


that should be a temporary swing though right? once the P/E capacity normalizes to the lower interest rates appreciation should be proportional to the base rate.


Yes but only if people are convinced to make the call to consider interest rates to remain this low for a long time at once. If they gradually do it and the underlying businesses continue to generate the earnings and growth expected, the outcome is different. In any case if you have made your money today and investing it, 4% may still be quite reasonable.


You'll need a fund with good dividend payout. SPY is currently at $1.30 and cost $327. If you put $450k into SPY you make $1870 per quarter. So, might need to buy $2MM of SPY.

But there are other good dividend funds and/or individual equities.


Dividends are left-pocket right-pocket. Dividends can help you psychologically, but in a way, it’s like forced selling once per year or per quarter.

Edit: if it helps you to invest, by all means, do it. But since dividends are mostly psychological, there is no point in limiting your stock picks to companies with a high dividend.


On the other hand, companies with long histories of sustained and rising dividend payments also tend to outperform the S&P500 in terms of total return (dividends + capital gains), and do so with lower volatility. Reasons include having a business that is profitable and stable enough to sustain such payouts and a management culture that appropriately balances shareholder interest (by paying dividend) against the long-term viability of the business (and can therefore continue its dividend payments over multiple decades).


Just a nitpick:

> a management culture that appropriately balances shareholder interest (by paying dividend)

In theory a company should invest in whatever has the most favorable risk-return profile. If it pays dividends, that means dividends are judged by management to be the best risk-return profile among all other alternatives. A company can pay zero dividends and still protect shareholders interests.


That’s not quite accurate. A company is ultimately controlled by it’s owners who may prefer dividends. One possible example is maintaining the current ownership structure while providing an income. Think someone owning 51% and wishing to maintain control.


> A company is ultimately controlled by it’s owners who may prefer dividends.

If the reason they "prefer" dividends is not because they evaluated the alternatives and decided that the risk-return profile was favorable (for the company, not for themselves in particular)), then they are acting against the interests of the minority shareholders. That may carry legal consequences or not, depending on your jurisdiction. In my country (Brazil), there are laws protecting the interests of minority shareholders. If you have 51% of a company that is listed on the stock exchange, you have significant but not unlimited power.

Also, maybe the company sees it as a risk that, in reducing the dividend, it may suffer in the short term due to the outflux of shareholders who see it as a dividend play. In that case, the risk-return profile of paying zero dividends is not favorable.


In practice protection for majority shareholders does not extend to a preference of dividends over investments in any jurisdiction. All investments carry risks, dividends don’t so the only legal justification required is to select a low risk threshold. Such protections are designed to avoid selling off assets at below market rates to majority shareholders and other such clearly suboptimal choices.


Counter example: Apple. Low dividend, but all other check boxes apply.


Sure, but let me make two points:

1. I did not say anything about how high the dividend is, only that it has been sustained and has not decreased for a long period of time (multiple decades). Some companies on the list currently pay relatively low dividends as well.

2. It is a heuristic, so it will definitely miss a few great companies and some companies on the list will go on to do poorly (not that any method of stock picking will be any different).


>On the other hand, companies with long histories of sustained and rising dividend payments also tend to outperform the S&P500 in terms of total return (dividends + capital gains), and do so with lower volatility.

Source?


it's not psychological at all. Dividends give you returns that can be reinvested in whatever you want, so it helps with diversification. Now, in the US companies have muddled the field so good dividends don't mean much, but it is still useful to remember this.


So does an equivalent increase in the share price of the underlying


Not really. Share buyback may be an advantage, but it doesn't necessarily reflect on the price of the stock. In other words, a company can buy its own stock and price can fall anyway (see for example GE). This cannot happen with money deposited on your account.


You’re conflating daily price action and the balance sheet. From a pure financial perspective, the stock price is reduced by exactly the amount of the dividend and nothing is reduced if a company doesn’t pay a dividend.

Everything else is the typical movement of any stock, that of course can be detached from reality. The thing is: people are way too focused on the dividend part as if this was the only valid way to investing.


Traditional investing focused on dividends for a good reason: you can live on dividends without paying long term capital gains (taxes on dividends are usually lower). At a time when most investors were common folks trying to make a long term investment decision, this was a good thing. Moreover, companies that pay dividends are by definition more mature, which can be a good sign for some investors that want more predictability in their portfolios. The reality is that dividend-based investment has its advantages, which were forgotten by the current generation of investors.


You can sell shares of a no-dividend company and reinvest the money in something else.


Do not do this. Dividends are not a good way to pick stocks. Dividends and buybacks are fungible, except that buybacks are more tax efficient. All equities should have the same risk-adjusted expected total return (i.e. including dividends, if markets are efficient), so you should not be picking stocks based on their dividend yield alone. If you want income from your equity portfolio, just periodically sell shares.


From the perspective of an investor this is spot on but on a societal scale it would be better if capital gains were taxed more than dividends. Dividends have to be paid from the income a company generates, meanwhile the stock price can be influenced by almost anything and it doesn't actually require the company to generate more value.


Ya, I think which way the rules should be here is a complicated question, but it certainly shouldn't be the case that we have two arbitrarily different taxation schemes.


If you make less than 38600, you pay ZERO dollars in taxes on the first $75k of qualified dividend income


Your sentence contradicts itself. How can you make less than $38,600 when you're making $75,000?

Also note that long-term capital gains are also taxed at the same rate as qualified dividends, but can be deferred into the future. Your argument doesn't seem to advocate for the thing you think it does.


A lottery generally has negative expected return, so probably not the best example to use


>In finance, we don’t look at maximizing total return but rather risk adjusted return

People don't regard variance as the same thing as risk, and that's why they buy lottery tickets. It's a sign the math is wrong, not that the people are wrong.


The lotto ticket is a bad example because it has negative expected return. A better example would be a positive expected return but with a very high amount of risk. Something like $FAS should fit the bill there.


Perfect! I was going to say, without any consideration of risk, buy far OTM options. For maximizing your Sharpe or Sortino ratios, which is more likely what OP was curious about, well that is quite literally a trillion dollar question.

That said, modern portfolio theory and portfolio optimization is pretty easy.

Whatever you do OP, please don't put it all under your mattress.

https://youtu.be/sHSaUqoKjkA

My chips are mostly off the table right now, in bond ETFs, but we'll see if the market tanks or not. I'm quite surprised that Q2 earnings this past week was not a bloodbath.


A lotto ticket does not have a good return; most times it has negative expectation; after a few weeks with no winner, it is sometimes positive.

Risk adjusted, almost independent of your risk metric, it is always horrible.


> ... I have $450K in cash burning a hole in my pocket.

First, the urge to put money somewhere could be a problem. Examine why you feel this way - closely. It could be you're letting emotions take over and that's rarely a good thing.

Second, you didn't mention debts. If you have any, you might look at the interest rate (including government freebies) and compare that to the most likely return you'll get. If your interest rate is higher than your expected return, paying off the debt wins.

Third, what kind of reserve fund do you have? If you don't have 3-6 months of expenses in a ready cash, consider creating an emergency fund.

Fourth, if you have not maximized contributions to tax-advantaged accounts, consider doing that. If your employer offers a match, really consider that.

Fifth, avoid the temptation to tell others about your windfall.

Sixth, has someone helped you who is now in need? Think hard about it. If so, consider helping them out.

Seventh, be sure you understand the tax implications of receiving the money. How much will you owe, if anything. Make sure that money is securely set aside.

Eighth, if everything else is taken care of, think about the lifestyle you want to lead. Do you have enough money now to retire? How attractive does that possibility sound? Taking that path means taking less risk with the money.


On debt, while the financial math and low interest rates usually favor carrying it, there is a certain spiritual liberty about not being beholden to it.

Much like having enough in savings that you don't have to fear a few months without a job drastically changes what you'll tolerate from an employer, not having the weight of debt, however advantageous leverage might be, does grant the ability to look at opportunities large and small without the "but ..."


Ever since John Bogle created the first index fund about 50 years ago, the advice of simply put your money in, don't try to time the market, and divide between an allocation of stocks and bonds based on your risk tolerance has performed far better than anything else. This includes periods where the market has been very over-inflated. If you had the worst possible timing and put your money in around the absolute peak before the 2008 recession, held throughout the crash, and left it in for a while, you would have more than doubled it a little over a decade later.

It may be hard to realize, especially at times like this when the market doesn't seem to reflect reality, but when investing on a long time frame the best advice is always simply to put your money in and to not try to time the market. On a long enough time frame, it will all come out in the wash.

The key, of course, is "on a long enough time frame". If you think there's a reasonable chance you might need the cash in two or five years, then you should either significantly reduce your exposure to equities like the S&P 500 or eliminate it entirely. The question then, of course, is what do you put your money into? Well, there are plenty of options. While the S&P 500 returns around 9% before inflation, you have a number of options that are lower returns, lower risk. For that, you have the entire spread from a savings account (1% right now) to short term Treasuries (2%ish right now) to various kinds of bonds. The simplest way to get, say, 50% of the reward for 50% of the risk is to have (for example) 50% in SPY and 50% in Treasuries.

Whatever you do, good luck, and I highly recommend the Bogleheads forum for good advice on any situation.


This has been true for the US markets till now but I am always scared to think of a scenario where they go the way of UK markets have done in the last decade. Look at one[1] of the FTSE 100's Index fund returns. They stand at 3.58% annualised, i.e your money is now 1.4x of the original amount. This is considering the fact that we are looking at returns from Aug 2010 levels when the FTSE index was already 20% down from the 2008 peak.

So the peaks I see now in Nasdaq actually look very scary to me. Anyway, I think if they decide to go ahead with equity, they should spread it out over a period.

[1] https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.asp...


Hmm, is that with dividends reinvested? UK firms tend to pay out higher dividends for various reasons. It seems that with dividends reinvested, you would have made approximately double your money before the crash [0], which took the value down by around 19% today, so you'd end with around 1.62x today in 10 years, nearly exactly 5% annualized including the effects of Corona.

That said, I would not make the UK stock market any significant part of my portfolio. It's an island of 0.06 billion people trying to go it alone in the world, under delusions of being a grand colonial power, while its economy has shrank since 2007. If I was trying to _grow_ my money I'd put it elsewhere. While I'm upset with recent US leadership as well, the US has a massive advantage in that it is the world's largest economy and enjoys the results of innovation that you won't see in the UK.

[0] https://www.ig.com/en/trading-strategies/what-are-the-averag...


It should be with dividends reinvested, in absolute index value I think FTSE 100 is still 10% down from 2008 peak. The difference in return might be because the fund hasn't tracked the index well.

I gave the example of UK as UK was precisely a power in the past and lost the lead somewhere and never recovered well. I think US is sound for foreseeable future but with the rising geopolitical tension and the sort of signals coming from China, if they become stronger in the future and have the ability to influence more markets, we might see influence of US waning as well.


> This has been true for the US markets till now but I am always scared to think of a scenario where they go the way of UK markets have done in the last decade.

This is why one diversifies. Only investing in the stocks of the country you live in is called "home country bias":

* https://www.investopedia.com/terms/h/home-country-bias.asp

Using a football ('soccer') analogy:

* https://www.franklintempleton.co.uk/investor/resources/inves...

Being slightly over-weight at home isn't totally bad (it helps with currency swings), but for most folks they'd do well to go international to a certain extent. An analysis for a bunch of Anglophone countries (US, CA, UK, AU):

* https://www.vanguard.com/pdf/ISGGEB.pdf


> They stand at 3.58% annualised, i.e your money is now 1.4x of the original amount.

Do you have a typo?


Annualised so ten years of 3.58% increase, 1.0358^10 = 1.4215


Thanks! I had missed the reference to "decade" on initial reading.


CL-USER> (expt 1.0358 10)

1.4215397


Aren't short-term treasuries more at 0.2% right now? Looking at yield to maturity here: https://investor.vanguard.com/mutual-funds/profile/VFISX


> The key, of course, is "on a long enough time frame". If you think there's a reasonable chance you might need the cash in two or five years, then you should either significantly reduce your exposure to equities like the S&P 500 or eliminate it entirely.

The shorter the timeframe that the money is needed, the higher the allocation to bonds. Vanguard has (in Canada) a bunch of 'all-in-one' ETFs that have as their holdings other ETFs in various asset groups: Canadian equity, US equity, international equity, bonds.

Shortly after they were announced, someone back-tested their returns to determine which of the offerings a person should get:

> I analyzed hypothetical Vanguard asset allocation ETF performance over the past 20 years ending June 2019, and here’s what I found:

> The worst 1- and 2-year periods were negative for all five ETFs.* [i.e., put it in term deposit to at least try to keep up with inflation]

> The worst 3-year period was negative for all ETFs except the Conservative Income ETF Portfolio (VCIP), which holds 80% in bonds; even still, VCIP only returned 1%.

> The worst 4-year period was negative for all ETFs except VCIP and the Conservative ETF Portfolio (VCNS) [60% bonds]. But these only returned 2.2% and 0.2% respectively.

> Looking further out:

> If you need the cash in 5–9 years, VCIP or VCNS should be the only Vanguard asset allocation ETFs on your radar. Even the Balanced ETF Portfolio (VBAL) [40% bonds], which allocates 60% to stocks, returned only 0.3% over its worst 9-year period.

> If you won’t need the cash for 10–14 years, VBAL could be an appropriate choice, as even its worst 10-year return during this period was around 2%.

> If you don’t need the cash for 15–19 years, you could look at a more aggressive ETF, like the Growth ETF Portfolio (VGRO). [20% bonds]

> If you’re investing for 20 years or more (and you are comfortable dialing up your portfolio risk to eleven), the All-Equity ETF Portfolio (VEQT) might be right up your alley. [0% bonds, 100% equities]

* https://www.canadianportfoliomanagerblog.com/choosing-your-i...

Note: if you're looking at long time-horizons (e.g., retirement in 20 years), and you can take higher risks, does not mean you have to: you need to first determine what your goal is (e.g., how big of a pot of money you need), and then work backwards from there to determine what kind of returns are needed to get there. If you need 'only' 3% returns, it probably is not necessary to take on extra risk to chase after 6%.


We are in unprecedented times (Lowest bond yields, highest debt, Crazy P/Es). Back-testing is only so useful. And only 20 years even less. We just had a GDP drop which is the largest since WW2 for some, or since 1929 for the U.S. Look at Japan's stock market index e.g. for what the future could look like.

Historically low bond yields: The room for rates to go lower is low. I would suggest to be careful with investing in them. If a rate hike comes eventually, both bonds (depending on maturity) and stocks (see december 2019 S&P 500) will fall. With negative real yields (bond yields - inflation), precious metals and related companies are lot more interesting. Perhaps REITs or some blend of solid dividen-paying companies. Anything that is somewhat inflation resistant.

Did you adjust your calculations for inflation? For the S&P 500, the absolute worst-case is 58 years of not being up, I believe. 1929 - 1987. Edit: This ignores dividend reinvestment. It seems to be 1929-1944.


I've seen that gap mentioned a few times in this thread. I checked out the visual in the thread [1] and I have a question since time makes everything complicated. This is definitely an example of a worst case scenario, exactly as you mentioned.

How do we calculate that in the total risk assessment? For this outcome to be true, you would have had to invest all of your money in a 6 month period and then tried to exit in a 3 month period during those referenced years.

It would also assume that you are not investing at any other period in between, which is typically advice that goes hand in hand with index funds and tracking the market. In theory and all things being equal, it sounds like that is neutralized if we try to get out in the periods I mentioned above, right? This also assumes no dividends have been paid out.

It seems like the maximum risk is high since the return could be 0% in theory but it also seems like the chance of that happening being _very_ low.

Genuinely curious how you think about it and what else is missing. It definitely makes me want to learn more about how we've stabilized the economy after The Great Depression.

1: https://www.macrotrends.net/2324/sp-500-historical-chart-dat...


From my point of view, as someone who is invested into an all-world blend like VT or VFFVX, it has been 2.5 years somewhat flat, and we still seem to be at a peak. https://www.multpl.com/shiller-pe .

I cannot really gauge risk in a systematic like you'd like to.

I'm generally pessimistic, because GDP growth is low, central banks have rates in a choke hold promoting misuse of capital. (In theory many existing companies shouldn't exist. Many are unprofitable, but they get by on cheap loans. Thereby taking away resources/people from potential/future profitable businesses). The ECB couldn't even raise rates in a supposedly economic growth period. The Fed did in 2019 while reducing the balance sheet, and it ended in a correction and lower rates and a restart of QE. Low rates also put a lot of pressure on banks and local banks. Economies and the world are increasingly financialized. The financial market adds little value to the real world aside from "productive" (think GDP-increasing / not consuming) lending. Consumer loans are awful. Buying your first house/land on a loan is good, though. Interest payments reduce economic output in the present. Individuals spend income of the future now, and depress future spending. E.g. interest payment of the U.S. are ~300bil/year right now ~10% of the budget. And for many economies and governments there is no end in sight. Ultimately this can only be solved by reducing spending (which doesn't seem likely for many governments), inflating it away, keeping rates at 0% forever effectively spending printed money, i.e. inflating it away. Also central banks can buy assets in the open market at face value to lower yields and swallow the coming defaults (which again means inflating it away, and also sending the clear signal that everyone will be bailout, perhaps again in the future). One aspect of this dynamic is currency demand through e.g. being an important world currency or having export surplus. Some countries can print money better than others.

When I say "inflate" I don't only mean according to CPI. If all the money goes into assets like equities or real estate, it is inflating that.

The stock market feels like a ponzi scheme more than anything.

I'm simplyfing here. Some countries are better than others. Perhaps a valid investment strategy would be to invest into indexes of good countries.

That felt a lot like rambling, but I hope you get some value from it. I'm interested in your thoughts.


> And only 20 years even less.

I'm guessing you're in the US. I'm sure you can find papers and articles doing back-testing to the 1920s, which would include the Great Depression. If you can wait long enough, things have always recovered and earned a return.

> Did you adjust your calculations for inflation? For the S&P 500, the absolute worst-case is 58 years of not being up, I believe. 1929 - 1987.

Not my calculations. That's also assuming that one has zero bonds: for most people, who are saving for retirement, the component of the portfolio that goes into fixed income rises as age approaches 65. What were bonds during that time?

Most average people don't have the stomach for 'raw' 100% equity holdings, and so bonds are often present; bonds also allow for having 'dry powder' available for rebalancing. Scenarios like these are why portfolio theory can be complicated:

* https://www.investopedia.com/managing-wealth/modern-portfoli...

* https://en.wikipedia.org/wiki/Modern_portfolio_theory

For good layman treatments on the subject I recommend the works of William J. Bernstein, The Intelligent Asset Allocator, The Four Pillars of Investing, and Rational Expectations:

* https://en.wikipedia.org/wiki/William_J._Bernstein

Recent interviews:

* https://rationalreminder.ca/podcast/108 (podcast)

* https://www.youtube.com/watch?v=haLGx8KlFvk (same, but video)

* https://www.youtube.com/watch?v=3GzkxkOEcWc

> Historically low bond yields: The room for rates to go lower is low.

One does not necessarily buy bonds for returns, but also (perhaps) to manage volatility (which is often used as a proxy to measure risk). And low bonds are not anything new:

* https://awealthofcommonsense.com/2020/05/low-bond-returns-ar...

And one has to look at the real return of bonds over the decades: yes nominal numbers are low now and were high in the past, but inflation was high in the past as well (e.g., 1980s).


Both of you make excellent points. I guess I'm jaded by the fact that VT (or e.g. VFFVX) has been almost flat for 2.5 years now. A pure US investment would have fared better.

I'm pessimistic about bonds because of the debt bubble (gov debt, MBSs, CLOs, corporate bonds) and low yields. Governments couldn't stomach higher rates, either. In the big sell-off we have seen in March everything went down together margin-call style. I guess it did lower volatility, but it also provided little upside.

Euro yields are even negative.

I don't see how any of the countries possible exit strategies could be good for bonds.

Thanks for the links!


> […] almost flat for 2.5 years now. A pure US investment would have fared better.

First: 2.5 years is a ridiculously short investment timeframe. I have sneakers older than that.

Second: perhaps it would have, but there was no way you could have known that ahead of time. Yes, from 2010-2019 the US markets (often measured by the S&P 500) has seen high returns. Now go back to 2000-2009 and see how things faired.

As a Canadian I often see often asking "why invest in Canada at all? why not go all-US?". This is often asked by people younger than 35 or so, who haven't looked up a bit of history, and only know about the last few years (look up the term "recency bias"). There have been times where Canadian equities outperformed the world, and also when international has outperformed the US:

* https://imgbb.com/pnDqKTg

* https://warrenstreetwealth.com/wp-content/uploads/2018/04/Pe...

You can make a good decision with the information you have available, but the result still be disappointing. See the video "How to Evaluate Your Investment Decisions":

* https://www.youtube.com/watch?v=I8gH5bR3clg


Second this recommendation of the works of William Bernstein, all of his books are excellent and highly pragmatic for individual investors.


Take a look at this comment from 'patio11 and response by 'mechanical_fish[0][1]. My investment strategy is remarkably close to what they've described (although I read/learned about it elsewhere - a really good friend). I still buy an odd stock in low single digits as a "token" - if I like the company I should get some stocks - think PTON, TSLA, AMD, GOOG, AAPL etc. However vast majority of everything else is in blend of vanguard index funds.

[0] https://news.ycombinator.com/item?id=10111454

[1] https://news.ycombinator.com/item?id=10114707


The answer is: nothing. At least nothing different than what was your strategy before that large sum of money entered your life. If I were you, I'd split up this sum in 10 or 20 chunks and mingle each part with the amount you invest monthly. The reasoning behind the split-up is that it's easy screw up when it comes to investment, so easing in rather than nose-diving prevents you from doing something stupid.

A last word of caution: maximized returns come with maximized risks


If you decide to invest it (in an index fund, for example SPY or IWM), I am not seeing any downside to selling cash secured puts. For example, on SPY, you could sell a short 48-dte 30-delta put (strike $312 on Sept 18) for $616 premium. If it is assigned (SPY goes below $312 on Sept 18), you will get 100 shares of SPY for $31,200 but you are no worse off than if you had bought today and also you will have reduced your cost basis to $30,584. If SPY goes up, the shares will not be assigned; pocket the $616 premium and repeat the cycle. Repeat this loop until your entire $450k is invested. This also has the advantage of spreading out your purchases, and thus dollar cost averaging them. Just a thought... I welcome any criticism of this approach :-)


The only argument against this that I can think of is that the market could continue to go up and up, and your premium gain might be less than what you'd gain through regular DCAing or lump summing in.


Thanks and yes, that is a good point. However, given that SPY is already at or near an all-time high, it seems unlikely that it would continue to go up every month or two by the premium amount (which itself is pretty substantial due to high volatility currently).

However, one adjustment if you have a bullish outlook is to reduce the delta from 30 to 20 or 10. Premium would go up and assignment is more likely.

OP, do it and report back :-) Even if you don't have any options experience, I am sure any broker will be happy to give you level 4 options (or at least level 2 which is what you need for cash secured puts) if you deposit $450k capital!


This may be an interesting starting point:

https://www.reddit.com/r/personalfinance/wiki/windfall


Actually surprisingly solid advice, even though it's reddit.

Helps that the first sublink in there is bogleheads :)


Don’t take financial/tax advice from random internet people.

Go to a fee-only financial advisor something like this https://www.feeonlynetwork.com in your state and take their advice that is a fiduciary. It will cost you a few hundred dollars but that is entirely worth it, we don’t know your whole tax and risk situation.


> I'm not comfortable investing the entirety into an index fund, given the current socio-political climate.

The government is printing an awful lot of money right now.

Keeping your money in cash isn’t a guaranteed return if inflation goes up significantly. You’re much better having it in assets with intrinsic value. (Stocks, real estate, etc)

I would suggest investing the money over the course of a couple years into an index fund, probably S&P 500 or total market.

Even if you invest at the worst possible times (right before crashes) you’ll come out way far ahead of leaving it in cash.

https://awealthofcommonsense.com/2014/02/worlds-worst-market...


> Even if you invest at the worst possible times (right before crashes) you’ll come out way far ahead of leaving it in cash.

I don't like this argument, because it seems to imply you would indefinitely leave it in cash. In this hypothetical situation, where a market crash is impending, and individual could invest at the bottom and make significantly higher returns than investing prior to the crash.

This of course goes without saying, "you can't time the market", but it's a bit dishonest to indicate that you can't beat the market here.


If OP isn't comfortable investing now, when would they be, or stated in other words, what about the socio-political environment needs to change to make investing 'comfortable'?

Depending on what kind of changes OP needs to see, they may not feel comfortable investing for years or even decades. And those years add up to many missed dividends and price appreciation.


The normal first question is "do you have near-term need for this money" which it sounds like your answer would be "No, this came to me and now I just need to invest it for a long time".

It sounds like your asset allocation is currently:

- $50k "index fund" (S&P 500?) - $150k land/home - $200k industrial real estate - $450k cash

I would suggest you start at Asset Allocation [1] and as an example read through the "Three Fund Portfolio" [2]. Before this cash, you were nearly 90% real estate. At the very least, you can outperform "cash at a bank" by at least keeping that $450k in a Vanguard or similar Prime Money Market Fund [3]. So as you think about what to do, take the 1.3% or so :).

[1] https://www.bogleheads.org/wiki/Asset_allocation

[2] https://www.bogleheads.org/wiki/Three-fund_portfolio

[3] https://investor.vanguard.com/mutual-funds/profile/performan...


Without knowing more about you - age, health, goals, risk tolerance, other obligations, etc - it's all just random suggestions from the internet.

My random suggestion here is diversify in to a few different equities areas. US, international, etc. I mostly have a few 'general market' funds, but a couple that are focused on tech companies, and they've outpaced the general market over the last several years.

Keep some in cash - ally and others have around 1% return on cash. not great, but it's something. keep maybe $80k or so in there.

put some in general 'broad market' index funds - total market or S&P or something - maybe $150k in that.

find some international funds - put $80k in that.

pick a precious metals fund - put $40k in that. Alternative, take some of that and put in to crypto if you've got an interest in that.

This would leave you with around $150k. Consider some more real estate - perhaps just land and let it appreciate, or a small house you can use as a rental, or more industrial. Or just hold that in cash for a bit longer while you wait and see what happens. You already have $200k in industrial real estate. If you're comfortable with that, and you're getting a return that from area, increase your exposure there.

Watch the investments - readjust portions to your comfort level - perhaps every 3-6 months - as things change. Keeping cash will give you some cushion if there's a downturn, either to weather a storm, or give you some ability to throw a bit more in to a specific market.

There's no rule that says you have to put it all in one index fund right now. You're in a fortunate position, and can afford to take this slowly, and spend time learning more about these various instruments before blindly throwing in hundreds of thousands of dollars.

Part of that learning can (and probably should) be meeting with a fee-only advisor who can review your situation in more detail and give you a more comprehensive set of recommendations more suited to those aspects we can't tell from your post (risk tolerance, life goals, etc).


If you do use a financial advisor, use one that charges hourly. The ones that charge a percentage win regardless of your outcome. I have been very unimpressed with their work when I have seen it in action. The flat fee ones are incentivized to give you less than what they would do in the same number of hours. Probably you can set up an initial allocation and learn about rebalancing, and you’ll only occasionally need advice in the future.

Another good book to read is “A Random Walk Down Wall Street”.


"use one that charges hourly" - that's what I'd meant by "meeting with a fee-only advisor", but perhaps my term isn't the best phrase to keep in mind. yes, keep a fixed fee (hourly, whatever) - just don't tie a % of your portfolio as a fee for someone to 'manage' your money. Or... don't do it without careful consideration.


Where do you find them? I’ve been looking in my area and there are a few I’ve spoken with that don’t seem to be in tune with 2020 or my personal philosophies.


What’s your goal? That’s the first question that needs to be answered here before trying to identify an investment strategy.


Absolutely! Let me also put other things in perspective: 1. Any “investment” is basically putting your resources in the hands of others (planners, CEOs of other companies etc) in the hopes that they can manage the money better than you. This is a conclusion only if you don’t believe you can manage the resources. Are you sure of this? 2. Why not invest in yourself? Depending on your life situation- getting into a good school, a good network/club, a good society might actually be a better payoff! 3. Building a startup might give you a much better reward if you are so inclined. The opportunity cost is very real (again depends on your life situation) 4. If you know where you’ll live for a foreseeable future AND if you tend to be shaken by market events, buying a house might be better (people don’t generally sell off their house so they tend to let their investment compound inadvertently!). 5. Investing in new experiences like doing an internship (no regard for pay) in fields you are interested in might open up new avenues.

I firmly believe that only when you are clear on your goal and having invested in oneself and having thought of everything else should you get to the problem of whether a particular etf is better or whatever.


Investment managers always ask this question and I never know what to answer. I feel like everyone's answer must be the same: maximize return, minimize risk.

What are possible answers to this question you're looking for?


You can't both minimise risk and maximise return. They're polar opposites. ("Risk" is a bad word for the concept. It's more about volatility. The more volatile the asset, the higher the fluctuations, and the less you can expect to still have tomorrow, but the more you'll have in 20 years.)

The expected answer is mainly about what risk you are able to tolerate, i.e. how soon you will need the money back again.


The general aim is to figure out how much money you need at different points in your life, for example:

- how many years until you plan to retire?

- how much do you need in retirement? How much do you expect to receive from social security/other income sources?

- do you have/are you planning to have kids? Are you going to pay for college? If yes, how much might that cost?

- are you expecting any other big expenses in the future? e.g. wedding, down payment on a house

- are you planning to take a sabbatical at any point? If yes, for how long and how much do you expect to spend?


You could be interested in retiring early (or immediately), or you could be interested in buying property overseas and spending your winters in Spain.

Also "minimize risk" is not consistent with "maximize return" so that's not even a valid answer. Someone might say "I wanna put it all on Black", and someone else might be saving for their child. Lots of really varied answers are possible.


Time frame - if you need the money next year your risk tolerance is very different compared to if you need the money in 10 years. You can't minimize both risk _and_ return, there's no free lunch


Are you looking to help others, or help yourself? E.g. your goal could be to help low income children have better lives.

Your goal could be to live on an island mansion in 20 years.


Time period would be a good place to start.


https://www.bogleheads.org/wiki/Managing_a_windfall

Use this money to max out all tax advantaged accounts available to you (401k, IRA, HSA), and invest the rest in a brokerage account. When in doubt, invest the money in a target date fund at Vanguard or Fidelity that most closely matches the date you plan to start withdrawing from the account. A total world fund/ETF, like VT, is also a fine option.


I'd advise you to stay liquid for a sizeable fraction of that for the next 12-18 months. The world is changing rapidly and access to a sizeable chunk of cash could make all the difference once the smoke clears and it is clear what to do. Also: you could go bargain hunting.


As someone who has been a partner in a fund in the past, I've done a solid amount of research, and for someone who is risk averse, one of the best strategies of the last 50 years has been 33% of your investment in real estate, 33% in hedge funds, and 33% in a portfolio balanced between stocks and bonds. I don't have the study on hand, and I also don't have the time to search for it, but doing research into the hedge fund field will probably yield this study. good luck


This is a good resource: https://www.reddit.com/r/financialindependence/

Long term VTSAX or FZROX are probably good places to hold most of that. You could keep $30k in cash for emergency fund.

The other comments suggesting the bogleheads forums are also right. Most of the other comments are a total disaster I’d be cautious about following any of the advice here (it’s also surprising to me how bad it is).

I also personally do some individual stock picks of companies I know in the field I’m in, but that’s still quite risky and not advised unless you like this kind of thing (Amazon, Apple, PTON, Nvidia, previously tsla). I hold long term for capital gains.

Long term index funds are the best bet, even if the market goes down you can wait it out if you’re young. If the current conditions scare you, you can “dollar cost average” entry which just means buying $X amount each month/week until you’re fully invested. Long term this kind of thing doesn’t matter though.

Are you looking to use the cash soon? If so you may want to not invest it. Being forced to withdraw is where the problems come from.

Don’t listen to anyone on here about bitcoin. That’s gambling, if you want to do that know it’s gambling and expect to lose everything.


Personally I would hold the cash until there is blood in the streets. That is the time that fortunes are made. We arent quite there yet, possibly next year.

In 2000 investors were screaming at buffet because he was sitting on billions in cash. They were saying he had lost his touch, he should pay a dividend etc.

Then in 2001 the crash happened and he was able to get some great deals.

The time to buy is when everyone else is saying dont buy, things have fundamentally changed.


> We arent quite there yet, possibly next year

The fact that a lot of people think this gives me confidence that it isn't going to happen anytime soon. I'll get nervous when the rhetoric is "The market is looking great for years to come!", like back in 2005/2006.


There's an amount of money you could plausibly need to avoid life consequences. You get laid off or your business fails, and you have to dip into savings to keep a roof over your head and food on the table.

Figure out how much that is, and leave it in cash or other extremely safe assets. This is a highly personalized number and it's hard to give good advice for it.

For the rest of your money, you now know that you'll basically never need to sell it. The only thing that matters here is the total return over thirty-plus years. This is broadly-diversified stock index funds - the standard boglehead advice works great here. There's always a risk that today's stock price is the best you'll ever see, so the historically superior plan for how to get money in the market is to just dump it all in and ignore the current price.

So yeah. Enough cash to make you "safe", rest in the stock market and ignore the current price and any price movements over the next three decades.


Never take financial advice from internet


As opposed to, say, bankers?


Never take financial advice from WSB


I'll second this.


Never say never


You just made Spock's brain explode.


Wow no one asked if you have a partner or children or plan to. It isn't clear how old you are, what you want to do with your life, if you have a secure job, if you want to travel, if education is worth it, if you parents/family needs help or if you want to own your own business. Without these things any advice is probably wrong.


"I have about $50K in an index fund, own land worth $150K (paid off) and another $200K in industrial real estate investments."

1. I don't like Index funds. They were a great investment in the past. They may be a disaster in the future.

2. "buy land they stopped making it" Mark Twain

3. "industrial real estate" could be top, could be a disaster, depending on what "industrial" means. Technology heavy REIT (IT, server, g5 infrastructure) could be okay.

You could go contrarian and keep it cash. You could diversify in foreign currencies. In the end, HN is not the right place to ask. I just recently invested in some Asian utilities companies. They pay 5-10% divendends. Have a telecom investment that pays 45% dividends. No kidding.

One word of wisdom: Do not do VC investments. I sunk a ton of money there. In for a penny, in for a dime and it will start sucking a tremendous amount of time out of you.


“I don't like Index funds. They were a great investment in the past. They may be a disaster in the future.”

Care to explain?

Are you worried about over-centralizing assets into index funds will screw with the market's ability to find the right prices for stocks?

Because I worry about that myself, but, then, what do you do? How do I possibly outsmart the market given the information problem?


I'm not sure of hify_hn's reasons why, but I've exited index funds recently due to:

- the overweight holdings in tech in many of them.

- those same tech companies are responsible for most of the growth in the past decade.

- retail investors are chasing the tail of growth which is pumping the price out of realistic prices. many more have entered the arena with robinhood, etc.

- there's too much cash being printed, feels like hyper inflation.

- the current bubbles and shift in funds (pharma desperate plays, gold safe havens) make me think everyone has a finger on the "exit" button.

- most every major indicator I see says a fall is near.

I'm no pro and this is only my opinion. Been doing this about 3 years with a mix of daytrade style plays (earnings, swings, cannabis bubbles, etc) that seed long term etf dca purchases.

I'm sitting on cash for now until near US election time. I think the robinhood retail passive crowd that's only recently started will be left holding the bag for the pros near election, much like the crypto newbies in that peak a while back who tried to get in at the top. Too many similarities of people that seem to have no basic understanding of how things work under the hood of things and just chasing a "really hot run in blackjack".

though I'm happy to admit I don't fully understand every nuance of ETF's I see/hear conversations with people clearly not understanding what they're getting into and it's just too similar to any bubble I've ever seen.

I've also considered it may just continue to go up and all this is unfounded and wont matter and I've accepted the possible loses of potentially new profit for the rest of this year. It's a cost I'm very happy to pay for peace of mind, and get back to my strategy when the world makes sense again.

In a nutshell it seems like the ETF has just become a raffle ticket that's being sold through making it easy to simply stick money into it without really looking at what you're buying and if it makes sense. Like the ETF is no longer an investment vehicle, but a product with a bunch of hype.


Overall, your post is more a critic on investment in this period rather than against index funds. Except for the presence of tech, which I'm not sure is this bad for people willing to take measured risk.

>there's too much cash being printed

Agreed, but then why hold on to cash until the election rather than buy gold or similar?


Sure, I totally plan to return to the index when it seems to make sense so you're right, it's only a bad investment (imo) right now.

I have other investments in web entities (think reddit style aggregation sites) in niches that tend to do well in downturns. They're pretty much a very small fixed cost for me every month (spot instances on AWS ftw) and can be cut off at any time. I feel safe holding cash (and its deflation) because the profit from those is no longer seeding indexes but being stacked on my cash pile. Ideally keeping my overall cash from deflating.


Go out and get a copy of "The Only Investment Guide You'll Ever Need" by Andrew Tobias. It's entertaining enough to keep you interested, fairly short and it's stood the test of time - first published in 1978 and updated a few times. You can read it easily in a weekend.


This is my advice: make sure to spend enough time to educate yourself about financial investments. My rule of thumb is to spend one hour per $1,000 you have in assets.

So, with $450k in cash, dedicate 450 hours of the next 1-2 years to build a solid education for yourself. Don't simply follow the specific advice that you feel makes more sense.

If you think this is a lot of time... 104 weeks in 2 years = you need to spend ~4 hours per week to educate yourself. Read 2 hours for 2 evenings per week. That's it.

Too much? Ok, cut it in half. 225 hours in two years. Still a great effort that will pay you back for the rest of your life.

This is above any specific tactical move or decision you can make.

If you are not willing to do this, then accept the fact that whatever decision you will make, you will have a higher chance to regretting it.


Some education is good, but that much could result in paralysis by analysis. He'd be better off taking a relatively small chunk (say $25K) and learning by doing. Open a brokerage account and experiment with different investments.

Some people do not have the right "temperament" for investing. They're afraid to buy. Afraid to hold, so they sell too soon. They can't handle the volatility, so they get out at the first sign of trouble. It takes practice. Paper trading can help, but it doesn't get you the same feel as working with "real" money and markets.


Right now one should have a significant position in gold/metals for a couple of years to hedge governments severely inflating their currencies to fight the crisis/reduce their obligations.

Quality stocks and real estate, typically hold their value as well during volatile times. Do not panic during short term crashes. These should be bought on ten-year+ time frames.

As things improve over the next few years you can start selling the gold and buying other hard assets again. If approaching retirement, it will be time to start moving into more conservative income options like dividend-stocks, bonds, etc.

The one thing you don't want to do now is leave a bunch of cash sitting around. It will get hammered.


This is a big question that doesn't have a single answer, and might be the wrong question to ask. I recommend Bogleheads or buy an hour with a fee-based financial advisor.


How about your return on happiness. Why not consider where you would want to spend your retirement and invest in making that place a reality. Forget ROI... think happiness.


Maybe they don't want to think about retirement now. They just want to invest the money and forget about the issue, and do now whatever they make them happy, which is not planning for retirement.


Don’t feel bad about doing nothing. At some point the world will be more financially rational. You shouldn’t have fear of missing out when things are so topsy turvy.


With investing you can always wait an year or two with the cash and think about it. However if you end up doing nothing with the money for 10 years, you will lose some serious purchasing power.

I would just put first everything to an index fund, then from there on try to find more interesting investing opportunities.


“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”

— Peter Lynch


That's the wrong comparison.

The right comparison is to what would have been lost in corrections but for the preparations.

I mean, if you have x losses in preparation to achieve y losses in actual corrections, when you would otherwise have z losses in corrections for z > x+y, that's a win.


Of course, but for z > x + y to be true you'd have be amazing at timing the market (or just very lucky), which very few people are.


Any evidence to back up the quote?


Scroll down to the table.[1]

[1]https://www.fool.com/investing/2019/04/11/what-happens-when-...

Basically, between 1998 and 2018, if you were out of the market during the best 10 days, you cut your return in half. And the more days out, the worse it gets.

Of course, this is artificial in the sense that you'd be pulling out one day, then back in 2 days later and doing it again and again, but the point stands, you can miss a week in the market and it can have a huge impact on returns.


I don’t know the original context, but I take a quote like that to be a reminder that there’s cost to preparation and you could go overboard.


It's a bit late in the cycle, but you can still make a few bucks in gold. As soon as your friends & family start talking about investing in gold, sell.


Go through wiki and threads on https://www.reddit.com/r/personalfinance.

You may also find interesting to read through https://www.reddit.com/r/fatfire if you'd like this to be your starting point towards retiring.


Step 1: Choose a diversified equity index based on your time horizon and risk tolerance. You can also choose a mix of indices.

- underlying principles: Diversification, reduction of exposure to idiosyncratic risk (as opposed to systematic risk), Modern Portfolio Theory

Step 2: Invest $8,653.85 a week for the next year in your indices of choice.

- underlying strategy: dollar cost averaging

Step 3: If the market tanks in September because school re-openings ravage the country, invest the rest of your money at an accelerated rate.

Step 4: Continue to reinvest income steadily for the rest of your life. Never liquidate a diversified index because of a recession (this ruins the whole investing strategy).

Step 5: Gradually readjust your portfolio into lower risk indices before/during retirement based on your risk tolerance. Warning: Even if you have low risk tolerance, you must have a strategy to live off your earnings for the rest of your projected life span. Generally speaking, the lower your risk tolerance, the longer you have to wait before retiring (because bonds are guaranteed to provide low returns) or the larger your portfolio needs to be upon retirement.


I’m a big fan of boring. I like parking stuff in either Wealthfront or Vangaurd account, picking a diversified strategy, and leaving it alone.


The markets are extremely overinflated as of now. We will see an adjustment by the middle of 2021 at the latest.

I would wait until the news starts to sound so horrible you can’t help to do anything but invest.

As many have mentioned, placing it in an index fund is a good idea. I would go for that! But just wait until the market has the next downturn, invest, and don’t look back.


> We will see an adjustment by the middle of 2021 at the latest.

I love people who claim they know what the market's going to do, and continuously call for a crash. These are the same people who have been calling for a crash for the last three years. Here's the deal, sure we eventually have corrections, but if you have cash on the sidelines then you just buy more and lower your dollar cost average. I did this pretty aggressively in March / April in peak market overreaction.

Just look at Apple and Amazon stock. Everybody was saying they were way overvalued and not to buy. What happens? Both of them absolutely crush earnings, and Apple the largest company in the world pops 10% in a single day on Friday.


That’s two companies. Granted, they collect a larger proportion of revenues than many others within the NYSE.

The market overall is not healthy. As long term unemployment continues more and more people will hang on to their iPhones or cancel their amazon prime.

Those two companies, as well as Google, will be relatively protected during this period. The rest of the market hasn’t been truly exposed to the macroeconomic effects that COVID-19 will bring us in this country.


You realize that this strategy isn't going to work indefinitely? People like you will be blown out in the future. Sorry if that sounds awful, but it always astounds me how people think investment managers are tantamount to tea leaf readers, and that they've figured it out by simple dollar cost averaging. I just don't understand the mindset


Clearly it won’t work in the long term. No one knows what the market might do tomorrow. We might think we know but no one can ever truly know (legally speaking).

What I’m advocating for is mainly based on the timing: the market corrects, on average, every 8-12 years. Right now, many Robinhood investors (like you probably are) are extremely bullish and are inflating the market.

When the bubble pops I will see you at the bottom. And I damn well hope I am wrong.

Buckle up.


> People like you will be blown out in the future. > Right now, many Robinhood investors (like you probably are)

First off, I am not a robinhood investor. I've been in the market since 2002, with a significant amount of capital invested now, weathered 2008 and this years Covid action and seen many bear markets. I find the fractional Robinhood "traders" comical and a train wreck waiting to happen. Buying Hertz, Kodak, Nikola.... That ain't me, so don't make assumptions. I have cash on hand, I have large percentage in J.P. Morgan ($JPST) a bond traded ETF which pays a monthly dividend and has a 8% return the last 3 years.


I have read all the comments here, and although the 8-12% per year returns you might get from the stock market are tempting, my investment strategy has always paid off by at least doubling but usually tripling my money every 3 months... buy low and sell high. examples: buy a house in gated community or on the water on a tax auction or foreclosure auction offered by the court house and never bid higher than a third of the appraisal value on any deal, then sell it for what its worth on zillow. number two, buy jet airplanes or helicopters on auction sites and same thing never bid higher than a third. The reality of these auctions is once you bid higher than 50-100k, the small fish drop off and you either win or its a much smaller bidder pool. you're more than likely to win deals that are 5x to 10x cheaper than what they go for on the retail market.


Get some land, plant trees and all sort of vegetables, and live there basically in this small heaven.

That's my plan at least


Right now is a challenging time to invest.

In general I would lean towards well managed active funds versus pure index funds. The markets are in a time that a good active manager can get you some added return.

With that said I'd probably lean towards something like the all-weather portfolio. See:

https://www.iwillteachyoutoberich.com/blog/all-weather-portf...

Note: this portfolio does cost you some potential upside in good market conditions but with less down risk.

Disclaimer: I am a big fan of Ray Dalio who came up with the all weather portfolio. I have 7 figures in such a portfolio. For the equity and bond portion I use Vanguard active funds.


Ray Dalio has also said it's a foolish time to be holding bonds, of which the All Weather he came up with is 55%. A bit contradictory


The first rule of money is, "Don't lose it".

As to what to do with it? If interested in shares, a rule that I like is to invest in companies that make products that you like. Also, hopefully, you can make some assessment about the management of the company. If they are bringing a new product to the market, can you use your expertise to evaluate that product?

Michael Burry argues that Index Funds distort the market. Think lemmings. Better to use one's own judgement.

Is the sun always going to be shining? No, rainy days always come. In life, you will have both lucky and bad breaks. So make the most of your lucky ones.

And don't think you are a genius, when you make a lucky investment. Back to rule #1.


If you want to get rich and are reasonably intelligent/motivated, the best investment you can make is in YOU. With that much money you have the freedom to not earn income whiling attempting to start a business or join a higher risk venture.


Great to hear you are able to have these kinds of decisions to make!

Maximize return needs input * when do you plan to use the money? * what does maximize mean to you (more money is not always what people mean: Examples maximize social good, maximize for long term use in a trust, etc)? * what are your goals?

There are many other questions that could be asked.

Recommend you hire a fee only financial planner.

Also take a personal finance class to help you understand the different types of investments you have (cash, index funds, real estate, land, etc) and to learn how each type of investment is measured over time.

Hope you find your path to your goals :)


Globally diversified low-cost index funds. Meaning not just US, S&P500 etc, but also Europe, developing markets, Nordics, «small cap» (ish) companies.

That’s the portfolio I’m using, anyway. No currency hedging and slightly underweight (but not majorly so) wrt. the US.

Some US-based index fund strategies include only the US, but that leaves you less diversified. Though with better returns, historically.

Not sure why you’re leaving index funds so underweight in your strategy; curious what options you’re considering. There aren’t a lot unless your strategy is more along the lines of wealth preservation.


My advice is unconventional. Why maximize your return? Money is a renewable resource, but time is not.

If I were you, I'd spend the money to enjoy my time with others I care about and donate the rest to others in need.


Because managing the money wisely allows you to exchange less of it for more enjoyed time and more donation power, of course.

Your goal of using money to make you and other people feel good is not unconventional; the advice is unconventional because it's not an effective way to reach that goal.


It's $400k, not $4m. OP still has to think about money if they want to live a median US lifestyle. Good stewardship of this windfall will give them more free time and independence in the future. Your objective is reasonable but your advice won't help OP.


>Money is a renewable resource, but time is not.

Money is not renewable because you must spend time to obtain money.


Any answer here that includes the word bitcoin will be downvoted to oblivion, but it was the right answer 10 years ago and it is still the right answer today. Ignore and downvote at your peril!


Or other cryptos. I think in the short term, one of the altcoins will give you more % growth. Can move it back to Bitcoin later for the long term.


If you want to secure your current wealth by saving, the fiat standard is not for you. Bitcoin is saving technology


So I have a Coinbase account and from all their free crypto promotions I have around $150 of Eth. I'd like to start adding some more to this to hold very long-term - is there a certain exchange or some other way you'd recommend, like Kraken or a hardware wallet?


Sure. If you have a serious amount of savings, the best approach to balance security and practicality is to protect your coins using multisignature, or multisig. https://en.bitcoin.it/wiki/Multisignature


How old are you? What are your career and life goals? How much risk are you comfortable with?

Finally, keep im mind: "past performance is no indication of future returns." This is more and more true.


Buy land in Portugal or Malta and leverage it to get a EU Passport.


You'd have to be careful! From what I understand, you can do it in Spain as well, but spend more than 6 months of a year there and you're now a resident for tax purposes.


Visit them first! I really did not like Malta, I would 100% go with Portugal, or Spain/Madeira.


Madeira is not a country, it's part of Portugal.


Sorry I meant the Canary Islands , a part of Spain.


I’d buy passport in jurisdiction with zero personal tax like Antigua and Barbuda.


Why do you need EU passport? Seems like unreasonable investment


Have you not noticed that due to the disastrous covid response that the USA passport is basically worthless right now?


+1


A US passport won’t let you in right now?


Well, getting EU passport sounds like a long-term plan and investment. Current travel ban doesn't look like long-term. also, what's the reason of getting into EU? Is there more opportunity for investment? The vast majority EU countries the purchase power is lower than it is in US.


Yes, prop up a system of corruption.


I have always regretted investing spare cash while feeling a sense of self imposed time pressure. I would sit on it until there is an opportunity you are excited about.


I recommend listening to https://www.schiffradio.com His guidance has really worked for me.


Thanks for that - I didn’t know it exists!


This may be frowned upon but :

I am in a nearly identical situation, within a few percent of your dollar amount.

Ive been looking for a while for a partner for a lifestyle business, something along the lines of a maker space but open to a wide variety of ideas, most of them somehow variations on buying a large commercial space cash and using the free rent to build a business that creates community.

Me email is in my profile, feel free to get in touch, if you'd be interested in brainstorming.


I'm currently starting a new maker space in Texas, please feel free to reach out, happy to share what we know and have learned.


Thanks! Sent you an email.


Hire a good CPA they'll be able to execute strategies to reduce your tax burden and shelter the amount you pay on what it is earning you with what you do decide.


Buy oceanfront real estate in Panama and rent it out.

Residency comes with this.

You may use both if things in USA gets from bad to worse - from political, economical, financial and social aspects.


If the USA destabilizes, the last place I want to be is Central America.


Share your ideas then.

Panamá gets stable revenue from Panama Canal plus some natural resources and operates in US dollars in eastern timezone.

As a plan B it’s not exactly that bad.


Your advice only works if one speaks fluent Spanish and is well versed in and comfortable with the way societies work in Latin America.

For anyone else it is a recipe for disaster (as in being taken advantage of many times over)


I don’t speak Spanish and I own condo in Panama and I renting it out and I live in USA.

So I’m walking my talk.


Plenty of Americans (and Canadians) in Panama that barely speak Spanish and they're doing just fine. I'd get out of Panama City though, there are a lot of nice seaside towns, much nicer than Panama City.


Try Mexico, where our southern border friends keep putting decapitated heads on poles.


If you're against a broad market index fund right now (which I think is fair, not so much because of the socio-political climate, but because of the high implied valuations of the companies within it), I'd recommend putting about all of it in Berkshire Hathaway as a set-it-and-forget-it type thing. It's effectively a cheaper index fund with better-than-average companies.

Why in the world would I recommend a single stock? For one, Berkshire is a "financial fortress" with virtually no debt, $100B+ in cash, and about a collection of dozens of wholly owned subsidiaries: GEICO, See's Candy, BH Energy, BNSF Railway, etc. Berkshire's so conservative that, although Buffett and Munger have acknowledged leverage could boost their returns, they refuse to take on obligations that would even create a 1 out of 100 year risk of failure. More importantly, I believe it's cheap at current prices (a little under $200 for each class B share). When you buy Berkshire, which has a market cap of ~$500B, you're getting $175B worth of stock $125B in cash, and the all the subsidiaries for $200B. And I'd bet the intrinsic value of those subsidiaries exceeds $200B by a substantial factor.

Risks: (1) The biggest problem is that Berkshire is already quite big. That makes it difficult to compound capital at large rates. But compared to the S&P 500 or the even-bigger tech companies, I'd rather be buying Berkshire, at least at today's prices. (2) Buffett and Munger's advanced age. This to me is not as huge of a problem as people make it out to be. Todd Combs (GEICO), Ted Weschler (investment manager), Greg Abel (non-insurance ops), and Ajit Jain (insurance ops) are extraordinarily talented... to say nothing about the leadership in the subsidiaries. And Berkshire's built such that it would be a great business even without these top-notch managers. (3) Time. This isn't a problem if you're happy to hold Berkshire for 20+ years. But markets are emotional beasts and stock prices can decline rapidly and unpredictably. Berkshire isn't a bond nor does it pay a dividend. So don't buy Berkshire if there's a risk that, 5 years from now, you'll need to sell or if you're the kind of person who can't deal emotionally with large short-term declines in stock prices.

Disclaimer: NOT investment advice. Just my personal opinion. I've been buying up more and more Berkshire in the past few weeks.


Just as some general advice, imo that’s enough money to visit with a fee-only financial advisor for some planning. I don’t think my numbers are wildly off for location but you could probably spend like a grand (.22%) to get a solid plan in place that you can ride for a while. Or like others have said, roboadvisor. I don’t think target date fund makes sense outside of a retirement vehicle but maybe that’s an option.


You don't say much about how much time you want to spend managing your investments. That is an important consideration. On one end of the spectrum, you may have several hours per day to track your portfolio along with market indicators and news -- On the other end, you may not be qualified, or have the time to spend.

No investment advice offered here will be worth anything until you decide where you are on that spectrum.


So $450K is both a lot of money and not a lot of money. Yes you could maybe buy a house with it, but with the current economic climate of foreclosures just over the horizon, I would probably wait for the market to bottom out to do it.

If it were me, I would start looking for vacation properties which are selling as a steal. Then when the real estate market recovers, sell it. And enjoy the wealth that comes with it.


Not sure if you've been following the vacation rental market, but it's exploding right now. At least that's the case in the northwest.


Since you’re looking to maximize return, not risk-adjusted return, you should buy Bitcoin and roll deep OTM weekly put options on large cap ETFs.


> Given this spread, what should I do with the cash?

There isn’t a single answer.

Depends on factors such as:

- your goals (e.g. would this be for future retirement, for paying your kids’ education, etc.)

- your age

- your risk tolerance

- etc.

What about the socio-political climate makes your risk averse to investing into an index fund? And are you referring to all index fund, which can vary on many dimensions such as region, cap size, type (e.g. equity, bond), etc.


Real estate. Great hedge against long term inflation. And a mortgage allows you to borrow 5X at low interest rates, with rental yields generating a profit. Example: you can borrow 2M at 2% (interest only) and rent out at 3%. Real estate rising 3% on average means a capital gain of 70K a year, which is a 16% yield on your 450K investment.


the problem with real estate is that it's work. Even if you hire a management company (which does hit your profit), shit like bad tenants can really screw you up, if only in term of time spent on paperwork and legal garbage. In the best case scenario it's low (but not zero) work, but in the worse case it's a LOT of work.


Get LEGAL Indian immigrants as tenants. Especially the ones with tech related jobs. We always pay our rent. We dont want bad credit. We keep things normal.


The rent's the easy part. It's what happens to the apartment, neighbor complains, etc that matters (and race doesn't really matter for this, everyone's capable to be assholes in their own way).

Plus picking tenants based on race is quite illegal.


Agreed. Apologies if offended.


Knowing very little of your goals, risk tolerance etc I'd say start with https://rparetf.com/rpar . You can always exit it and do another strategy if you find more tailored advice

Else consider one of the Vanguard TargetDate funds if you have a target date to retire.


Figured this would be as good a place as any to plug this retirement planner I wrote a while back: https://lunchmodel.com/retirement

It's probably a little complicated for a layman, but I think it works pretty well, and is quite flexible.


I'll just leave this bit of advice

Very few fortunes are lost by spending or excesses, they are mostly lost by bad investments and bad financial decisions

* It might be better to take your time and think long and hard before making any investment decisions

We are at a point of unbelievably crazy valuations and in the midst of a global pandemic

a lot of stuff is going to go tits up


Since people are handing out general investment advice, is it possible to invest in a country? e.g., if I think Central African Republic is going to be the next South Korea over the next 20 years, how would you invest to reflect that without just investing in a specific business operating in CAR?


I imagine there are ETFs for this purpose.


I am in a similar situation. I ended up investing overseas on a good real state deal with high yields. The tax side of things was simplified by the type of investment (debt investment). I think the pandemic created or accelerated a bunch of business opportunities, some of them out of the US.


Question, out of curiosity - How do founders manage those troves of cash after selling their startups for billions (sometimes even in cash)? I'm aware the amount is a mix of cash and stocks paid over 3,4 years. But, in some transactions the cash portion is not less than ~$300M.


In your position I would save 90% on the safest type of account you can get (big bank, insured). The remaining 10% I would spend trying to bootstrap some business. There's a big chance of failing, but if you fail you will still have a nice amount to reboot.


If you have spare time in your life, go to your banker, ask for 450k loan, buy 2-3 houses, keep 200k cash, rent the houses, if stock markets loose 50% of its value, invest 100k on sp500 index.

There is almost nothing that can beat renting houses if you are a non finance expert


My advice: take advice from people who have invested that kind of money before, and no one else.


Wait for the next crash and then buy up stocks and rental properties (apartment buildings) at a discount. See 2008 for reference. While you are waiting for the crash, you could put some of your cash into gold, which will do well when the US economy crashes.


I did that from 2008 to 2014 (but I didn’t buy gold).

It worked out terribly. I should have parked it in a diversified portfolio. Instead, housing and equity prices inflated, and I lost a ton of potential gains.

Buying gold during the crisis would have made it even worse:

https://www.macrotrends.net/1333/historical-gold-prices-100-...

If you must buy gold, it’s best to buy some when the stock market is booming. If you bought gold in 2011 or 1980, your current return would be 0%. It would have been very negative last year.


I don't follow. My advice is that OP sit on their cash until the next crash happens. Then they should buy up stock and rental property. Before the crash, if they don't want to keep everything in cash, they could buy some gold which tends to increase in value right after a crash. The crash that started in 2008 bottomed out in March 2009 when the DJI fell to 7000. That would have been the time to buy stocks. By Nov. 2013 the DJI was up to about 14,000. As for gold, it was at $864/oz around Sept. 2008 which was a few months before the crash. By August 2011, gold was at $1819/oz.


I'll give you a proper Hacker News answer:

Invest it in software companies who develop in Haskell and Rust.


Haskell, eh. But companies using Rust are generally quite innovative and posed to do well in the next decade: Facebook, Dropbox, 10x Genomics, Cloudflare, etc.


In my circle a lot of people just use robo-advisors (wellfront, betterment, etc.)

The whole point is that it doesn't cost much and it saves you time on learning about finance.

If you are interested in learning finance, then of course this might not be the best approach.


I can recommended keep investing what you understand best. Trying to invest in something you don’t understand is one way to minimize returns.

Another advise is to go long in the investment with some risk spreading according to your tolerance.


'land worth' is absolutely not 'cash', it's way less liquid, and 'cash' means ~'immediately' available liquid money.

I wouldn't call the REIT cash either, but maybe that's more debatable.


Find a good financial advisor that can tech you all you need to know to figure out what to do here.

Looking at where you have the money there is no rush to figure anything out. It's invested pretty well. Well enough to give you time.


Are you looking for financial return only? If not https://www.givewell.org/ searches for charities that improve lives most per dollar.


I'm going to bet that there are tips at the bottom of this thread that actually work and were written by someone who has made a lot of money off it, but it's hard to sift through them and find out what works.


A nearly even allocation between: SPY, GLD, TLT, HYG, VXX (or equivalent sector standins) Has a very good very stable yield for many, many decades.

To have anything better, one must learn a lot about investing and keep after it.


Warning: VXX is virtually guaranteed to drop in price in the long run. It uses periodic reverse spits to maintain its price. Never buy and hold it, ever.


https://stocknews.com/what-happens-next-after-vxx-expiration...

“Indeed, in the initial prospectus from 2009 stated, “due to the construction for this product one needs to be aware that its value will approach zero over time.” The prospectus also called to retire the fund after 10 years which will be at the end of this month on January 30.“

“All told since its inception 10 years ago, on a split-adjusted basis, the VXX has declined from $120,700 to the current $47 level.”


Don't worry about maximizing your return. Worry about frittering it away. Do you already have the habits to be frugal-ish and control costs, or do you start spending more when you have more in your pocket?


Call Vanguard, setup a Personal Advisor account, and let them do their thing.


Money printer go brrrr, means invest in housing. It’s the only investment that gives you 500k of tax free profit.

Also, you know your city, the local market and what the possibilities are much deeper than any corporation.


I recently bought muni bond funds and SLV to hedge on inflation. PMO pays a nearly 5% dividend which is tax free. I'll take that over a 1% savings account (with taxes) any day.


AMZN has made a 75% return this year, and you're buying municipal bonds ?

Someone is _really_ risk adverse ...


key word, recently. As in, within a week. I realized a nearly 80% gain on my AMZN shares, and 50% on MDB shares, and a bunch of other wins as I managed to call the bottom of the V pretty well.

However, with the nasdaq fully recovered, yes I am realizing some gains and taking a more defensive position.


Buy Bitcoin. You can do so with paypal here https://emeraldledger.com/buybitcoin


Personally I would put half in foreign stocks (like EFA etf) and half in gold. The dollar is dropping against foreign currencies and they are all dropping against gold. Every central bank is printing money like there is no tomorrow: with good reason we are in the midst of a deflationary shock.

But couple the money printing with record low interest rates (and negative interest rates), this creates a special situation where gold (and other hard currency like bitcoin) outperforms. With a negative real rate on bonds, you will lose inflation adjusted purchasing power in bonds even if you come out positive. There are not a lot of great options right now.


You can develop something on that land. Or, go for some more real estate (maybe get some multifamily), but leave ample reserves given the climate.


Life is short, make sure to leave room to enjoy it.


Invest in yourself, that money could buy 45000 books (assuming 10$ each) and after reading them all you could even be a billionaire


Look in to opportunities for syndicated real estate investing.

You could also pursue investing in multifamily homes given you live in the Midwest.


Since you have $750K in assets, you could consider investing in a social enterprise or giving to charity. I support GiveDirectly because their model -- direct cash transfers -- is very efficient.

Otherwise, as other people have said, it depends on your time frame and the amount of risk you are willing to take on. If you can wait 5+ years, a fund blending index tracking with some bonds (for stability) is an excellent option.


> consider investing in a social enterprise or giving to charity

You could even set up your own private foundation for serving a good cause dear to your heart.

https://www.investopedia.com/terms/p/privatefoundation.asp


5-10% of your total into BTC and ETH, 1-3% into smaller but high potential projects like LINK, MKR, KNC, etc.


If you are interested in investing in a chatbot app targeting middle east and LATAM, please let me know.


I would sit on it until the situation gets more clear, good deals should be coming and cash is king


Wait 6 months for the market to crash. Then buy things like Coke, McDonalds, etc.


What can you do, what do you know? If there were a clever answer that fits everybody, all the banks would already have poured all available money into it.

You maximize your returns by beating the market. You beat the market by being more clever than the market. Where do you have the resources to beat the market?


I know a great financial advisor in the Dakotas if you'd like a referral.


if you are trying to maximize returns, i would say crypto. you could have doubled your money in ethereum in the last few months.

if you are maximizing stability, probably guaranteed return products around 2-3%


Red, go for red! (Unless it's a tuesday - then definitely black!)


Dollar cost average into Bitcoin with swan swanbitcoin.com/swym


Use it as down payment for three condos in Austin TX and rent them.


I thought about doing rental properties and then came to the conclusion that the amount of work to make that happen, just isn't worth it for the average person. You're either stuck hiring some management firm or doing it yourself. It isn't easy to get the capital back and will take years to see any sort of returns.

Never mind the fact that we're in a pandemic where ~1.4M people a week are losing their job. Who are you going to rent to?


It may also mean there are desperate landlords looking to sell. If you can deal with reduced/no rent for a year, there might be some great bargains maybe?


That seems like an increase in risk disproportional to the return on investment.


Whew, really, really run the #s, I've seen some things listed there that are absolutely losing money (beyond the depreciation part). $450k renting for mid 2k.


The most secure thing you can do with that money is buy gold/silver and pay to have it stored in a secure vault. Honestly, that is more secure than keeping dollars in a bank account or US treasuries. Also, gold/silver are appreciating.


Gold/Silver prices are sky high right now, not a good time to buy them. Not to mention buying physical metals involves high transaction costs, which is frustrating. Precious metals are safe investments, but wouldn't expect them to appreciate much more in the near term.

Also, money in a US bank account is FDIC insured (up to $250k or something), how is that not secure?


consider watching www.tastytrade.com. They advocate self directed investing using options. My wife and I live in the midwest as well and we like the approach.


My allocation

  20 % in physical gold
  10 % in Bitcoin
  10 % in gold mining stock
  30 % in cash
  30 % reserved for the coming stock market crash (to pick up cheap blue chip stocks)
Source: gut feeling


Buy a house, live in it.

Your return = time to do what you want.


OOC what is industrial real estate investment?


I'm not sure where you should put it, but with 150k land + 200k industrial real estate, you should definitely not put anymore into real estate.


I’d put $100k in bitcoin, $100k in large cap tech stocks, and keep $250k in cash in the highest interest bearing FDIC account you can find.


I'll handle it for you.


Buy gold


put every last penny into bitcoin, and I'm not kidding


Put it all in TSLA. By some accounts, predicted to reach $3,000 per share.


YOLO Tesla call options - Pretty obvious. Or Kodak, both great companies.


Start putting $10k/year into Series I bonds as inflation protection.


Buy Bitcoin (BTC).


Investing is a very specific and esoteric skill.


20% Stocks

20% Bonds

20% Real Estate

20% Cash

20% Bitcoin


r/wallstreetbets


buy gold


#1: go buy those night vision goggles you've always wanted and take a vacation. Life is short and you should have some fun. Once that's done, do the below:

Expect inflation over the next 10 years, so keep the land & real estate investments (good hedge against inflation). Also, there are strategic ways to use these for tax purposes...talk to a good tax lawyer.

Treat 10% as "gambling" money with investments. Try to pick some stock market sleepers.

Spread 60% across a few American Funds and/or Vanguard selections, depending on your risk tolerance. Also, max out a Roth IRA every year starting now.

Keep 7-10% in a savings account that's accessible for emergencies.

Put 7-10% into bond funds.

Take whatever's left and put into a down payment on more real estate, either for a personal property or investment property.


This is a really complicated question and nobody in this forum is qualified, nor is it even legally permissible, to give you such feedback. You should seek out a financial advisor.


Invest in structured investments, the same ones used to buoy annuities. All the upside, less risk overall than most investments.


I'm not seeing many replies that take into account we are in the m̶i̶d̶d̶l̶e̶ beginning of a pandemic which is what was asked.


Hookers and blow


Bitcoin


Bitcoin or a 10x moonshot.

More real estate.

Gold.

Various index funds.


QQQ all the way.


The hottest investment in the next year I think is going to be secluded properties away from large cities, especially if they come with fiber internet (think Montana, Idaho).


All in chainlink


I enjoy how /biz/ and HN mixes together.


This was the most /biz/ ask hn ever in fairness.


my hot stock tips free of charge $NXRT $VVNT $ALRM $NVDA


Make sure you have a store of value in your asset allocation (gold, silver or Bitcoin) to hedge for inflation.


One of these is not like the others.


Buy QQQ https://www.google.com/search?q=QQQ


If you seek out average advice, expect average results.

You are going to get a bunch of people talking about equities, Bogleheads, bla bla bla. Read the book “Expected Returns” and start pulling threads.


The best thing about average advice is that the results are pretty much guaranteed. Someone who's asking a question like this lacks the skill to differentiate between better-than-average and worse-than-average advice. So giving them average advice with nearly-guaranteed average results is doing them a great service.


Not if average results means they will lose their money, which is what usually happens to people who invest money without understanding enough to manage it themselves.

If you want advice about money listen to rich people not middle class people who read investing forums and get rattled when the stock market drops.


I think we have different ideas of what "average" advice is. People on Bogleheads don't get rattled when the market drops - they buy more aggressively.

Listening to people who got rich starting their own business, or making shrewd investments isn't useful for most people. That approach is hard to replicate and has far more risk. Someone who ground their way to financial independence with disciplined, diligent, and patient investing is a more approachable and realistic role model for a middle-class person.

Once they have a solid financial base, they can always try starting a business or making some other bet to try and launch themselves into the ranks of the truly rich.

Outsized wealth is a combination of hard work, good decisions and good fortune. But people (understandably) tend to minimize that last factor. So even if a middle-class person takes a rich mentor's advice to heart and does everything right, they may not see the same results. Whereas index-based investing is a time and numbers game; luck doesn't come into it.


Saying that index based investing doesn’t involve luck is exactly what I was getting at by the usual advice. Unfortunately, buying index funds, particularly US stock market index funds, is a matter of investing based upon selection bias. On the long timelines demanded by index investing, staking your claim on the US equities market is hugely risky, particularly when you are doing so without an investment thesis that can guide you if your assumptions change. Ask yourself if there is any condition where you would deallocate from stocks. If the answer is no, you shouldn’t be investing - you are just parking money somewhere based upon hope, not an investment thesis. It’s just high class gambling. The real adjusted return of the US equities indexes is far from certain, and trusting your financial future to them is at best a gamble, at worst a reckless decision.

Instead of buying dumb index funds, at the very least one ought to learn about the well studied areas of return drivers and diversify against those. The bogleheads who invest based upon simplistic ideas like low fees, asset (not return driver) diversification, and buy and hold in order to drive compound returns are giving advice (imo) akin to giving “common sense” advice from 50 years ago because it feels right. The reality is half or more of that common sense advice was proven idiotic 50 years later, and those who followed it without the ability to adapt to the changing world ended up paying a worse price than being wrong in the first place.


> Ask yourself if there is any condition where you would deallocate from stocks.

It's reasonable to deallocate from individual stocks, or to sell to reallocate to other investments and keep to your plan. Deallocating from the stock market entirely, long-term is a much stronger position to take. There would need seismic shifts in the global economy to do that, because it's like admitting that on aggregate companies aren't going to make money anymore, right?

> staking your claim on the US equities market is hugely risky

I don't believe I ever said you should invest solely in the US equities market. There's also REITs, ex-US developed markets, bond markets, emerging markets.

> The reality is half or more of that common sense advice was proven idiotic 50 years later

Can you share sources, please? I'd love to learn more.


Jackass Investing and Millionaire Fastlane are good layman books. Expected Returns is a more advanced but accessible one. Also the Missing Risk Premium is good food for thought since if its thesis is correct nearly everything you read about risk management in typical indexing investing literature is bogus and the opposite of true.

Tl;dr is two much more sane approaches to investing are return driver focused or income generation focused capital allocation instead of asset appreciation and compounding based upon speculative indexing. These btw are what rich people do with their money (hedge funds, managed futures, income generating investments) not park it in index funds and hope the underlyings appreciate due to asset prices going up. Rich people pay 2/20 management fees because the fees pay for true diversification. Diversification is real but requires diversifying return drivers not asset classes. (Asset price changes are just one return driver.) If you are just sitting in asset backed index funds there are a variety of tail events (non-apocalyptic ones) where their action correlation goes to one and you’re perma-in the red until you die.


Thanks for the suggestions, I'll check them out.


Average results isn’t a bad thing to aim for, honestly. Most who shoot higher miss.


average results when it comes to investing means loss of principal.


We're currently printing, and will be printing more money. This is not investing advice. I'd put it in crypto or gold, or foreign stocks which are not undermining their dollar.


Where are my down voters now?


Take $200k and build out an equal weight portfolio of a bunch of different tech stocks. Take $160k and use as a downpayment on two different turnkey rental properties. Invest the remaining $90k in a decent index or mutual fund, different from the one you already have.


Surprised I'm the first person to mention Ethereum. And by the amount of people bashing Bitcoin. I suspect those are mainly emotional responses by people who are unhappy they knew about cryptocurrency for years and missed out on profits. In my opinion it's foolish to not dedicate at least 5-10% of a portfolio to high risk assets.


Maximise what return? Money? Gratitude? Ego?

- If you'd like to make a dent into ones life, help someone out with a low income to achieve their goals. Like paying for a drivers license or buying a okay car so mom can bring her kid to school. With that kind of money you can help a lot of people. - If you want to use money to feel safe, put some money on therapy, to know you never needed it in the first place and to get to know yourself. Buy a piece of land for everyone to live on your family and friends. - Ego? Spend it on cars? Parties, everything that was unreachable and plaster your confidence. - Want more money? Invest it in arms, wind energy, or start your own fund in the balkans.

Up to you


I’d buy more cash flow generating real estate.

As others have noted, we are printing cash and all assets valued in our currency are likely to be impacted.

Unlike gold, real estate should be able to generate cash and not cost you cash to hold.

They aren’t making more land. With rising sea levels there will likely be less land.

Midwest is a great place to invest. So is the south east.

If you want more information about what we do in these areas checkout our website:

http://www.accredited-capital.com

We are working to create returns for investors while also making a local impact by increasing levels of home ownership in areas that have routinely been overlooked by Wall Street.

Depending on your situation, these investments might also not be subject to tax.

Email me for more info if interested lcampbell (at) accredited-Capital (dot) com


Property taxes are likely to go up as municipalities struggle with budget issues due to a short and medium-term economic problem of reduced income in retail and other industries.

A huge number of people are thrown out of work and many of those people are renters, and renters pay rent to owners of property, and those property owners rely on the income to pay their mortgages.

They capped property tax and local tax deductions federally, they capped the mortgage interest deduction and can potentially go further in that regard.

I'm playing contrarian not because I think property shouldn't be owned or invested in (I did it as owner-occupier and landlord), or because I disagree with the statement about printing cash having to go somewhere, but rather because your comment is one-sided and sales-y.


I wouldn’t buy real estate in USA because some upcoming candidates likely start taxing everything under the sun out of their beliefs.

Indeed I’d buy quality real estate outside of USA which could be found at a bargain now due to covid.


If you want to learn a lot about startups and feel like meeting with a lot you could distribute it in multiple $20k-$30k bets in up and coming startups you believe in. If you aim at landing cash in 20-30 startups with that cash many of them will go to $0, some will be a break even or moderate success, and 1 or 2 might be a likely winner of the entire strategy. Angel investing isn't for everyone and also there are many better ways to see a "more guaranteed" return on investment but little as interesting as getting a front row seat to the future. If you are purely after risk adjusted returns then just make sure you are allocating to beat inflation, mitigate hyper inflation and into something you know or want to know a lot about. Many great investors out there to learn from but if you want the "starter" guide Angel by Jason Calacanis is a pretty decent book to read.


Cash out refi everything you can. At 3%, 30 year fixed, with fed target inflation rates of 2-3%, you’ll need a < 1% real return to make money on the transaction (ignoring fees).

If you can’t get that with passive investments over the next 30 years, the banks will have bigger problems than your loan.

Despite your risk aversion, consider putting some in a robo advisor (mix of bonds, index, foreign index, etc), to hedge against a spike in inflation, or a crash of just the US economy. The dollar has been falling recently. The robo will auto rebalance as the economic climate shifts.

As for the cash holding, you can at least get 0.35% at Wealthfront in a cash account. (Does anyone know of a higher return cash account?)

Bond yields are slightly higher, but not much these days.

I’m in a similar position, and am also betting on a crash soon.

I have been putting 2-5% into a robo every few weeks (when the market flinches). It’s been a bad strategy (I should have gone all in a month or so ago), but it’s better than 100% cash. If the market hasn’t crashed in a year or so, I’ll be all in.

I bet against the market for most of the Obama administration (because the bailout / zero interest rates didn’t seem sustainable). Clearly, that was a mistake.

You can’t beat the fed, and right now, the fed is printing unlimited money to prop up ETFs and issuers of junk bonds. Also, investors are holding record amounts of cash, and are slowly putting it back into the market in seek of yields.

Good luck.


If you're betting on a crash soon, why not just hedge your existing positions on long dated PUT options? That's what they are for , insurance.

As far as OP is concerned, there's not much point into cashing everything if the timescale is greater than 5+ years for needing any of it. Trying to time the market is just a fools game, consistent investments in the indexes always works out in your favor long term.

Regarding interest rates, .35% is pretty poor, just off the top of my head Marcus is over 1%.


If you bet on a huge crash then your PUTs will lose the value anyway. So what if they give you 50% profit when the inflation is 1000%.


I’d buy gold or crypto instead.

Stock market can keep going up due to inflation even if everything is crap and politically manipulated.

Gold is a real indicator and crypto is icing on a cake


A huge crash will net you much more than 50% profit, you can pull that any day of the week for the last 4 months with the market volatility.


With PUTs the maximum you can earn is 99.999%

With inflation you can lose much more.


What? That’s completely false. The last S&P dump in May net me roughly $1550 per $150 SPY contract.


There are tons of high-yield savings accounts paying much more than 0.35%.

Telling people to increase their indebtedness to buy index funds right now is pretty dubious advice.


I think it’s reasonable to take out a long term loan given current rates.

Surely, there is some percentage where it makes sense. If the loan percentage were -1%, it would obviously be a good idea, right?

Assuming 2% inflation, sitting in cash is like taking out a loan you don’t need out at ~2%, and stuffing the money in a mattress. That’s clearly a bad idea, right?

Current rates are 3%, and the market returns about 7% in the long term. (4-5% inflation-adjusted).

Historically, the only way to get burned reinvesting a loan at these rates was buying at the peak prior to the Great Depression. The market will go up or down over the next year, so averaging the purchase over that time eliminates the timing risk.

I can’t come up with a more risk averse strategy than this that also has positive real returns in expectation. Any suggestions?

(Edit: minor clarification)


I haven’t done a ton of research, but I know for certain that Ally Bank and Discover Bank offer better rates than 0.35% in their savings accounts.


You are trying to time the market. If your goal isn’t to cash out within a year, don’t look at the prices, just buy S&P index fund like VTI and a bonds fund in some proportion. Rule of thumb is 100 - your age is the percentage that goes into stock fund, your age is percentage that goes into bonds.


The strategy I described is sometimes called “time cost averaging”

It is a form of timing the market. The idea is to buy at about the average price over some time period to avoid getting bitten by volatility.

For reasons not involving investments, I had to have a large cash position until we were well into the recovery from the last crash.

Buying index funds at all time highs during the biggest economic downturn of our lifetimes is a bit much to stomach, so I’m spreading the purchase out over time.


One other thing, I recommended a robo over a manually rebalanced vti/bond split because they include some money in foreign indexes (increasing diversification), and auto-rebalance. Some also do fancy stuff like tax loss harvesting.

All of that complexity supposedly beats simple manual approaches by a percentage point or two (after tax).

Also, most robos are idiot proof.


From what I understand, the global economy has become so intertwined that 90% of the time domestic and foreign markets will mirror each other anyways. The example I was given is that the Taiwanese life insurance industry is larger than the US mortgage industry and how they both affect global markets. I personally like a mix of S&P500, treasury bonds index, small cap domestic, and a foreign stocks index. And a good robo that gives me that mix with a 0.07% fee or whatever like VTI does could be great. But if the fees are higher than that, I’ll balance it myself.


The Vanguard Federal Money Market Fund (Settlement fund) has a variable rate but produced 1.1% in the last year and 4% since inception.

In addition when you park your money there you can easily invest it at any time. In general going straight up Vanguard with minimal oversight is much better deal than Wealthfront.


I believe the poster has $450K in cash, in addition to the real-estate holdings, and that is already more money than they know what to do with. I don't know if it makes sense to mortgage "the base" to add more cash to that pile.


I moved my cash from Wealthfront to Marcus, I think their rate is 1.05% right now?


It was way higher before. I got a 1 year cd at 2.25% with Marcus that is expiring next month. Those were the days.


For now, steer clear away from index funds, stocks, property investments, etc. Things are looking to get ugly in the near future.

Maybe bear ETFs or put options against stocks that have performed well over the year if you're really looking to drop money into something, but that's pretty risky in itself.

Also, be cautious if thinking about any crypto investments in the next month or so. Short term is way over bought for BTC, but towards end of fall into winter when the price corrects a bit could be a good time to invest a conservative amount.

Just holding and waiting out the coming storm is the safest way to go at the moment imo


1. Read this: https://medium.com/@100trillionUSD/bitcoin-stock-to-flow-cro...

2. Buy and hold Bitcoin for a while. (longer is better).


I agree, and I've put quite a lot into bitcoin recently due to the halving. But that was only after reading and understanding everything I could about the bitcoin markets. From the outside it definitely seems like a crazy speculation.

I would never recommend someone invest in bitcoin unless they've done a lot of research, are ready to hold through drops of 50% or more, and are prepared to hold for many years. Investors who haven't done the due diligence could be tempted to sell after a huge drop, and it's probably not for most people.

That being said, to outsiders it could be argued that bitcoin is at least a decent asymmetrical bet, and worth throwing a couple percent at. But only as much as someone is willing to lose.


1: buy BTC 2: HODL 3: ??? 4: Moon Lambos, bro.


Any mention of Bitcoin or cryptocurrency investing should be banned on HN.


Uh no? I think it’s better to have open and free discussions.


Arguable, I'd put in a $10,000 into it if I had the cash to spare. It's made me decent money.


Yeh sure, made me lots years ago, also cost magnitudes more their life savings. It doesn't sound like OP is looking for gambling.


I agree that Bitcoin isn’t a smart investment due to volatility. However would someone be similarly criticized for suggesting someone start or work for a startup? To me they have a similar risk profile.


Not really, as far as four months ago, Bitcoin was at 8k per coin... today it's around 11k per coin, it's about 30ish percent profit.

Edit: Unless you bought 11k+ and sold below that point, there's no chance you lost on Bitcoin.


So? You could have dumped money into ANY of the big tech four months ago and been up WAY more than 30%. The S&P500 index alone is up more than 30% since the crash.

Bitcoin peaked at 20k in December of 2017, and dropped to $3100 exactly a year later. Seems like anyone investing at the top, and there were LOTS of inexperienced mom and pops doing so, are down at minimum 50%. Without any type of dividends or stock in a real company.


Do you actually think there was a lot of volume for Bitcoin at 20k? A handful of people even bought Bitcoin at the 20k level. It was only trading at prices that high for a few hours


Yes I do. Significantly more so than the weeks/years since. There was weeks and weeks of heavy volume, as it declined to $3000. If you bought over $10k, you've had money tied up doing nothing for 2.5 years in nonsense. Prices don't go parabolic like that unless dumb money gets involved, and subsequently wiped out.

https://www.tradingview.com/x/73konLcD/


your chart has a couple candles, but doesn't address my point that very little volume was transacted at 20k. People aren't going to stop storing value on the Bitcoin network, so I suggest you lighten up


Not really, you can double your money at the casino too, doesn’t mean it’s not gambling.

It’s the risk and volatility that separate investment from gambling, not the return. Bitcoin is firmly in the latter territory.


Continue to ignore the best investment of the last decade? Good idea.


you support censoring technology topics on a technology forum?


Yes, when it's nothing more than a bunch of shills potentially convincing the naive into buying into their pyramid scheme.


have you read the whitepaper? Bitcoin solved doublespending and is the best implementation of digital cash in a long line of innovation. in a way all monies are pyramid schemes. You don't think maybe you're being naive for dismissing a clear breakthrough?




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