Could a diet where you only eat the meat from one slaughtered cow be the ideal vegan diet? One consciousness killed.
This approach would require purchasing a half from a local farmer who raises 100% grass fed animals and makes his own hay.
The hay definitely kills some animals when harvested though. It would be interesting to quantify the death impact (calories of beef produced per bale of hay) of a hay harvest and compare that to the death impact for some staple vegan foods, and see how things stack up.
Edit: The need for hay is a climate based one. There are places where cattle can graze for more or less days in a year. Hay is used a winter feed in places where winter forage is unavailable.
While the notion of consuming only one cow's meat appears to reduce number of deaths, we must confront the environmental repercussions of livestock farming.
The resource intensive nature of animal agriculture causes more harm than it's immediately apparent (deforestation, biodiversity loss, eutrophication ...).
Part of me hates Walmart and part of me loves it. I love that I can go to one place and get 80% of whatever I'm looking for. But I also like the specialty stores my town has. N of one but since Walmart moved in ~20y ago I haven't noticed much changing with the makeup of small businesses. Since Walmart moved in there have been more of the other big box stores, though.
How many people really buy and hold and don't question their strategy when the 30%+ drawdowns come? We know sticking to your plan is key to long term success. Can the masses stick to simple buy and hold long term?
I don't know about how many people keep holding, but we just experienced a 30%+ fall in tech stocks (and 25% fall in sp500) last year. I held all my stocks because, well, what else was I going to invest in? And if I don't have a different preferred allocation, then I'm just trying to time the market.
My experience (thankfully not paid for with real money, but fake trading) has shown me I am not good at market timing, particularly knowing when to get back in, so I don't bother trying.
It doesn't really take restraint so much as an acceptance that I will likely not do better than buy & hold. I don't enjoy seeing my balance go down, but I am not close to retirement, so I accept that I need to wait it out to catch market rallies because I am not paying super close attention to markets.
> I held all my stocks because, well, what else was I going to invest in?
I recently learned about a class of investment strategies called tactical asset allocation. One aspect of TAA is to switch to some other asset when your main one isn't performing well.
It's a form of market timing but it's systematic and backtestable. Reallocating once a month, a lot like a rebalancing that even B&Hers probably do.
This site [0] has some interesting articles on their blog. HAA has really piqued my interest [1].
I have your mind set now. But it took me multiple painful lessons over the years until the learning stuck :-) Luckily I was much poorer back then or I would really be bummed right now.
You don’t have to have a strong stomach if you don’t pay attention to the market. Buy and hold or “set and forget” are legitimately good strategies at least in part because of this reason.
Of course you also have to believe the theory of buy and hold is sound and likely to work in the future. I think that's another part of why I struggle with it.
I do think it's important to be aware of our emotions when it comes to money and investing. I've realized that I won't be comfortable enduring drawdowns much more than 20% and so I've found alternative strategies that let me sleep at night.
Your stomach should turn more by actually realizing those losses rather than just letting it ride.
Market downturns mean nothing! You lose literally nothing; you still own the same things you did in the morning, and will own those things again in 5 years (or more based on splits/dividends).
Honestly yeah, this is kind of a critical part of profitable investing; if you can’t hold through downturns, you ought to find someone who can and then forget about that money entirely.
My thinking used to be this way but then I experienced some things in life that made me consider the non-zero possibility that something could happen to me that would require me to tap into retirement savings. If my retirement strategy involves waiting out large drawdowns, then there's a chance I would need to tap into my retirement accounts at the bottom of a large drawdown. I like the comfort of not having to endure large drawdowns for that reason.
Er, you’re acting like you have a choice here, but you don’t. You either endure the drawdown or you just straight up lose your money. You’re trying to say that straight losing money is better than not losing money, but that’s nonsense.
We all choose what investment strategy to follow. I have chosen other strategies that have smaller drawdowns.
In the case where I have to tap into my retirement account because of unlucky life circumstances, I'm happier that I'm selling something I bought for 100 at 75 vs having to sell it at 50 (hypothetically).
Except 50 was never on the table, and 75 is a fraction of what it would be worth if you stopped trying to actively manage your portfolio.
I cannot overstate how bad of an idea this is. Investing is not the same as decorating, there are objectively bad ways of managing your investments and this is one of them.
You will end up poorer as a result of this behavior. I hope that happiness is worth it, because you are paying through the nose.
I think we're agreeing that you need a strategy and you need to stick to it. Where we differ (I think) is you think my strategy is objectively bad and yours is objectively good. I don't think we really know what each others strategies are though.
I'll assume you're a proponent of B&H SPY and continuing to buy $X/month of SPY until you retire. I'm just saying there are other ideas than that that you can use that have smaller drawdowns and comfortable returns to risk. You could B&H 60/40 SPY/treasuries for example.
Is it active management if you rebalance 60/40 once a year? What if you rebalance quarterly? At what point is it active management and therefore bad?
For the curious thread-reader, here are some websites that offer ideas that might make you question whether all "timing the market" is the same and equally bad long term.
Note, dear thread-reader, how these links are all blogs, none of them are actual academic literature, unlike the dozens of citations in even an introductory book such as A Random Walk Down Wall St.
If pablum on the Internet is your preferred method of investing advice, by all means care about a blog. If understanding finance as it operates is your preference, I recommend staying far, far away from the Internet blogosphere.
I don't believe the EMH is settled nor that markets follow a random walk. There is academic literature to back up both sides of both of those beliefs.
Things aren't as settled as you make them out to be, and that's OK. What's important is that you have enough confidence in your methods, whatever they are, to stick with them. In the end, the stickwithitness may be more important than what you stick to.
EMH being settled isn't of issue here, and I did not claim the markets followed a random walk. It's the name of a book, not a theory pushed by the book itself. The fact that you haven't even heard of the book speaks volumes as to your education in personal finance.
The basics of investing are settled for individuals, and you are not operating at a level of sophistication to rise into the areas of finance that are debated.
These aren't "my" methods, they're the methods. You either do these basic things as a retail/individual, or you lose money. Period.
I'll admit I haven't read the book completely or in a long time but is it not about how the EMH is true and so anything other than B&H low-cost index funds is a fruitless pursuit? Doesn't he back that up with the random walk theory of asset prices?
Instead of me assuming I know what you mean by the methods, would you mind stating what they are?
I think we could agree that some of them are:
* Have a sound plan (I'm sure we could debate what makes a plan sound)
If your plan is "throw my money into a pit" that is not a good strategy, even if you stick to it. So no, we would not agree.
You ignore Nejat Seyhun's 1994 paper "Stock Market Extremes and Portfolio Performance" [0] which says:
> For the 1963-1993 time frame, the findings were similar. The index gained at an average annual rate of 11.83%, for a cumulative return on $1.00 of $23.30 over 31 years. If the best 90 trading days, or 1.2% of the 7,802 trading days, are set aside, the annual return tumbles to 3.28% and the cumulative gain falls to $1.10.
And from ARWDWS [1]:
> The past history of stock prices cannot be used to predict the future in any meaningful way. Technical strategies are usually amusing, often comforting, but of no real value.
Further:
> Using technical analysis for market timing is especially dangerous. Because there is a long-term uptrend in the stock market, it can be very risky to be in cash. An investor who frequently caries a large cash position to avoid periods of market decline is very likely to be out of the market during some periods where it rallies smartly.
A lot of people would be better off it they just took a $100 a month and put it under their mattress, i.e. throwing money into a pit. There are obviously many better ideas than that.
Thank for for that paper, I'll give it a read.
The next line in Seyhun's paper is more interesting to me and the focus of my research and strategy:
> If the 10 worst days are eliminated, the annual return jumps to 14.06%, and the cumulative return increases to $44.80. With the 90 worst days out, the annual return rises to 21.72% and the cumulative gain to $325.40.
If you're open-minded, give the paper a read. They suggest a method, that you can verify yourself, for figuring out which months are likely to be worse.
The paper you shared defines "in the market" as long equities and "out of the market" as long T-bills. The paper I linked looks at other assets you could rotate into besides T-bills. How could that one change (they offer several other ideas) impact the results of your paper?
If that's not interesting to you, skip the paper I linked.
Personally, I believe that type of research is still valuable. I don't structure my life just based on things in published and cited articles.
If you can't smell the salesmanship taking place on this link, there is a whole lot more wrong with your filtering abilities than I had initially thought.
So based on this, I think you have a filter problem; you seem to be unable to accurately evaluate sources for their credibility, and take in any/all arguments without understanding how easy it is to be manipulated by un-credible sources into believing hard-to-disprove ideas that are nonetheless actively harmful to you and your ability to grow your investments.
This leaves you susceptible to charlatans and snake-oil salespeople, which fully explains your desire to believe proven-wrong ideas on investing. When you lose out on these market timing attempts, you apparently do so in a way that allows others to profit directly off of you, and you further advocate for others to follow suit.
We certainly have different types of filters. Your filter apparently catches blogs and that's fine. I feel I've been exposed to many interesting things on blogs. I'm sure others would agree.
Your model/filter may be better because you don't have to think about as many things. There's certainly more information out there than one has the ability to ingest. In my experience many things I thought were settled turned out not to be upon further inspection. A simple filter might be good enough for your purposes!
I think your ideas about investing can be correct (in that they produce favorable outcomes) and other ideas can be correct too.
Not a perfect analogy, but Newton's ideas about gravity are correct to explain a lot of things. Einstein's ideas expand and explain more. They are both correct, depending on the level of detail you need. Sometimes "correct" roughly equals "useful".
I'm not sure why I feel the need to convince you. I think your confidence in the face of contradictory evidence that I've seen triggers something on an emotional level for me. I also feel confident I am correct but you disagree.
Hopefully you, someone reading this thread, or I get something beneficial out of this, though! I hope you are successful with your investments and they give you peace of mind.
It's why having a plan and a strong conviction of that plan (for me this means having to schedule time to purposefully "sit down" with myself quarterly to ensure the plan is still accurate) is so important. When the shit hits the fan you want to be able to realize you are dealing with emotion, and to go look at your pre-flight checklist so to speak before you sell anything. If pre-set conditions aren't met, you have no decisions to make.
If you go into a "situation" thinking you are already overleveraged or whatever, you are much more likely to do something silly vs. if you went into the same situation comfortable in the logic of how you have your finances configured.
If you think about it, actually you should PRAY for drawdowns, unless you are very close to retirement, and assuming you buy-and-hold an accumulating ETF.
Here’s why: An accumulating ETF constantly uses the dividends from its underlying stocks to buy more of itself (instead of paying those dividends out to you).
And it can buy twice as many pieces of itself when it is at 50 versus when it is at 100.
It is thus to your advantage if the ETF is really low for a really long time.
> It is thus to your advantage if the ETF is really low for a really long time.
As long as you don't start retirement at the beginning of one of those decade-long periods where the market is flat. It would hurt to have to start selling shares at 50 when you bought them for 100.
Me! I’ve only ever bought total market index funds and they’re just gonna sit there for as long as I live, no matter what. If the world’s total stock value crashes permanently, I’m probably worried about something other than my retirement plans.
I am more worried that when I want to start selling them so I can retire coincides with the beginning of a long drawdown. I suppose one way to address this risk would be to save even more and don't retire until you have way more than you calculate you'll need.
One adjustment you could make is to slowly rotate into bonds (also via a highly diversified fund) as you approach retirement to dampen volatility (at the cost of lower returns, but hopefully that’s fine by the time you’re approaching retirement)
>>Can the masses stick to simple buy and hold long term?
This statement here is the key. This is why many times real estate investments work. You more likely to pay monthly payments on a loan with discipline, than have discipline to DCA into a index.
People think and work very differently under 'compulsions' and 'freedom'. There is always a phone to buy, car to change, vacation to take, and eating out to do with the money if you were not forced to put it away, like a compulsory monthly payment.
Even in cases where I have seen disciplined folks, one emergency/pleasure life situation is enough to ensure they fall of the wagon(spend thrift'ism).
This is why most calculations that don't take into account emotional aspects of investments are doomed to fail. And they almost always do. One thing nearly everyone is bad at is waiting, with patience.
I hear people say, in finance and in other domains, that sticking to the plan is the key. I think it's an essential principle to keep in mind to be an effective human.
Many diets will work if you'll just stick to them. Find an investment strategy you that lets you sleep at night and stick to it for decades. To steal a phrase from a diet book, "compliance is the science".
Anecdotally, all my moderately- to very-well paid tech friends have a robo investor and don't touch anything ever until they need to withdraw. I'd say most people don't play the day trading game, and that includes HODL'ing (man, that term is literally the only thing that came from crypto that I like) during bad downturns.
I find it interesting that most of the popular index funds are market-cap weighted, and that's just how it is. Why is it that way? Why do we think that owning the biggest companies should be the default?
1. You need some way of normalizing shares to produce a statistical sampling of the market, and capitalization is the obvious, existing market mechanism to do this.
2. You need to resist brute attacks on the index investment strategy. I.e. if a giant fund is known to just consider all shares equal, you could soak them by doing wild stock splits to put more of your shares on the market. Or if they consider all companies equal, you could soak them by bringing lots of empty shell companies to the market.
What is the market? The market is something like the returns of the S&P 500 index. How do we get the returns of the market? Make a fund that tracks the S&P 500 index. Why do we have funds that use market-cap weightings? Because we want to track the market.
I guess it's not about having an equal representation of companies or industries or sectors, it's about having an equal representation of where dollars are allocated. The goal isn't to take a dollar and buy a share of each company, the goal is to take a dollar and buy more of the companies that other people own more of and less of the ones they don't?
My point is market-cap weighted index funds are an investment strategy and not some neutral default thing that people seem to think they are (or maybe I'm projecting).
I think the point is there is no such thing as "neutral default". There has to be some weighing to define the market and distribution of your investments. Any act to prune the whole world economy into an actionable list is, in effect, a kind of weighing.
Existing indexes represent tried-and-true weighing methods that have are considered to summarize a market in some useful way. Index funds leverage that on purpose to not do a bunch of bespoke analysis. Not using one of these indexes puts you back in the realm of a managed fund with its own active research and forecasting...?
I think this is good advice since many of us spend a large chunk of our lives at work.
More generally, just try to be present and experience whatever it is that's happening right now. Always living for the future is a good way to waste a life.
>just try to be present and experience whatever it is that's happening right now
I feel so conflicted by this.
I was decorating a cake for a birthday and I got 100% in the zone. Like "I became the icing". Probably 30-40 minutes went by and it felt like 5. I'm not sure if I was present, but I did good work and I felt content like nothing else.
But I can't say I was present, I almost don't even remember the thing happening.
Perhaps that's because your memory is based on recalling what you were thinking about when you did something? If you "became the icing" then you probably weren't lost in thought, talking to yourself like "I should create a budget, I wonder what my spouse is making for dinner, I need to take out the trash, ..."
I'm reminded of Stephen Covey's Circle of Concern (everything you give you attention to) and the Circle of Influence (inside the CoC, everything you could have an effect on).
He says effective people focus their energy on their Circle of Influence. Many people waste their time giving their attention to things they can't reasonably control, e.g. other people reactions, the news, national sports.
I've felt this way for the better part of a decade. Then I read about how alcohol causes anxiety and then temporarily relieves the anxiety that it causes. I've been a little over two weeks without it now and I've noticed a decrease in my anxiety. Just not having the constant thought of when my next drink will be is relieving.
When you go on a walk, your mind comes with you. Take that time to think about anything you want! Or listen to other people talk about functional nanotech or whatever else interests you, i.e. podcasts. Reframe going on a walk as the time where you get to listen to podcasts or a time where you're allowed to do nothing with you mind and see where it goes.
I realized this is just advice for myself, so that I'll walk more!
This approach would require purchasing a half from a local farmer who raises 100% grass fed animals and makes his own hay.
The hay definitely kills some animals when harvested though. It would be interesting to quantify the death impact (calories of beef produced per bale of hay) of a hay harvest and compare that to the death impact for some staple vegan foods, and see how things stack up.
Edit: The need for hay is a climate based one. There are places where cattle can graze for more or less days in a year. Hay is used a winter feed in places where winter forage is unavailable.