Active VS Passive investing- WHICH IS BETTER for 20 years ?
Which will be better for your retirement ?
VOTE above
VOTE above
Mar 20th, 2019 9:23 am
Mar 20th, 2019 10:43 am
Mar 20th, 2019 2:48 pm
Mar 25th, 2019 10:47 am
Mar 25th, 2019 12:16 pm
Mar 25th, 2019 12:44 pm
I see..So for this reason, I refuse to answer this poll. There is no "better strategy." An investment is better when it is made as the investor is fully aware of why and how they are invested.
Its a quick way to get peoples opinion....
Mar 25th, 2019 12:54 pm
Doing something generally hurts returns. Doing nothing is most often the best course of action, which is why active strategies generally underperform.BadSitcoms wrote: ↑
I wanted to do one on this topic because these "couch potato" strategies have become very popular... but how can a "Buy and Hold" couch potato guy sit calm when the market goes down 20 or 30 ...even 40 percent..
They will say, "markets always go up long term..." ..... "dont worry, it will come back up..."
BUT what if the market doesnt recover in ones lifetime ?
Mar 25th, 2019 12:58 pm
The problem with framing a question in a poll is that you are getting superficial results. It takes no effort to answer the question. People like @rodbarc who has the thoughtfulness and deep knowledge to give you a well thoughtout response can't effectively answer your question because it isn't framed correctly.BadSitcoms wrote: ↑ I see..
Its a quick way to get peoples opinion....
I wanted to do one on this topic because these "couch potato" strategies have become very popular... but how can a "Buy and Hold" couch potato guy sit calm when the market goes down 20 or 30 ...even 40 percent..
They will say, "markets always go up long term..." ..... "dont worry, it will come back up..."
BUT what if the market doesnt recover in ones lifetime ?
Mar 25th, 2019 1:15 pm
This again will depend. For instance, I like to buy undervalued companies. Companies that continue to grow earning 10-20% a year, yet the stock is flat or down 20-30% happens quite frequently. Even upon release of good earnings, you can still see stocks crash. Take a look at graphs of AC.TO, BAD.TO or EIF.TO, some of my largest winners, you can see 20,30,40% drops that might make one panic over the last 2-5 years. For me as an active investor, I know these company's fundamentals were strong and improving. To me, the drops don't make sense so rather I took them as opportunities to invest further at a discount. A passive investor can also assume the economy as a whole isn't ruined beyond belief. Regardless of what happens, companies still need to exist and provide goods and services to the populace This earns income and therefore more or less an economy of some sort still exists. In a country like Canada where we have a growing population, all the more reason to think the economy will more or less expand in some capacity.BadSitcoms wrote: ↑
I wanted to do one on this topic because these "couch potato" strategies have become very popular... but how can a "Buy and Hold" couch potato guy sit calm when the market goes down 20 or 30 ...even 40 percent..
Mar 25th, 2019 4:57 pm
Would this be someone that failed to invest in bonds and other fixed income products as they approach retirement?BadSitcoms wrote: ↑ BUT what if the market doesnt recover in ones lifetime ?
Mar 26th, 2019 6:53 am
Reading the way you explained above, I think your question has nothing to do with the strategy employed (active / passive) and everything to do regarding the temperament to invest (or trade).BadSitcoms wrote: ↑ I wanted to do one on this topic because these "couch potato" strategies have become very popular... but how can a "Buy and Hold" couch potato guy sit calm when the market goes down 20 or 30 ...even 40 percent..
They will say, "markets always go up long term..." ..... "dont worry, it will come back up..."
BUT what if the market doesnt recover in ones lifetime ?
Mar 26th, 2019 10:40 am
Mar 26th, 2019 11:32 am
True, but comparing active management with an index benchmark is wrong because you aren't considering risk-adjusted returns. The active managers are attempting to manage drawdowns whereas an index fund doesn't.
I'm ok with that, I'm an active investor because the index doesn't meet my goals, so beating the index won't help me. Not every individual investor have the same investment goals, or needs. Some investors are concerned with beating the market, others are concerned with maximum safety over the highest return, and others are concerned with maximizing their income and the growth thereof.eonibm wrote: You can't argue with physics. Rodbarc might but there is a very good chance he will not after putting all the work he does into being an active investor.
Mar 26th, 2019 4:45 pm
You are misinterpreting the study . The study said active funds after taking into accounts fees underperformed 95% of the time. Because many different investors buy and sell their units at any time, fees will always pile on. An individual investor who may buy and sell stock as they see fit doesn;'t have the issue of these fees piling on.eonibm wrote: ↑It's a fact, supported by data, that 95% of all professional money managers do not beat the index over 20 years (individual investors as a whole fare even worse). So, there's a 5% chance an active investing will beat a passive. You can't argue with physics. Rodbarc might but there is a very good chance he will not after putting all the work he does into being an active investor.
Mar 26th, 2019 5:24 pm
Just out of interest, could you post the link to the paper? TIA.xgbsSS wrote: ↑ You are misinterpreting the study . The study said active funds after taking into accounts fees underperformed 95% of the time. Because many different investors buy and sell their units at any time, fees will always pile on. An individual investor who may buy and sell stock as they see fit doesn;'t have the issue of these fees piling on.
You cannot extrapolate the study to mean only 5% of individual stock pickers can beat the index. That is simply not what the S&P study found. I can post the link to the paper if you'd like.
Mar 26th, 2019 6:24 pm
You obviously don't know how to interpret 'the study' not to mention there are numerous studies that prove this.xgbsSS wrote: ↑ You are misinterpreting the study . The study said active funds after taking into accounts fees underperformed 95% of the time. Because many different investors buy and sell their units at any time, fees will always pile on. An individual investor who may buy and sell stock as they see fit doesn;'t have the issue of these fees piling on.
You cannot extrapolate the study to mean only 5% of individual stock pickers can beat the index. That is simply not what the S&P study found. I can post the link to the paper if you'd like.
Mar 26th, 2019 6:31 pm
For sure! This study published by S&P seems to be cited often on news and other secondary reports.
Mar 26th, 2019 6:38 pm
Yes, that actively managed funds net of fees don't beat indices mainly because of.... wait for it.... management fees.
Mar 27th, 2019 5:43 am
Mar 27th, 2019 6:46 am
The commissions I pay are nowhere near 2-3% compounded every year like many actively managed funds.
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