/biz/ - Business & Finance

>>16014611
It’s real until it isn’t. As long as the stock market has an uptrend and continues rising over the course of your life, it’s a lovely little thing. The second history changes course and the stock market goes on a long term dump cycle or dissolved altogether, the dream is dead.

>>16014611
Technically you can do that with any appreciating asset.

>>16014670
then basically there's no way to guarantee retirement. nothing is as hedged up as the packages these two sell and you could end up with nothing by the time you retire or just as much as you put in.

so is real estate really the best way to make passive income?

>>16014611
>passive income?
what do you mean by the word 'income'? you're not being paid a divi on index funds.

>>16014611
Probably the next big financial disaster. All the liquidity is being put into the index and not the individual stocks. Fucking stupid boomers.

>>16014795
It's not really probable to end up with nothing, moreso we could be hit with the hard truth that everything is somehow prepped up by meme values. The question is if you think that company shares will be more worth than Monopoly money or shiny rocks or a roof above your head. In general investing in companies is pretty much the only productive investment there is so you can decide yourself if you think humankind will be productive in the future or not (protip: if not, your investments won't be worth anything anyway)

>>16014859
>(protip: if not, your investments won't be worth anything anyway)

interesting take. I always thought the landlord always gets paid though. people need places to live and if you own property in a desirable area that tends to stay that way.

>>16014611
I'm 100% in VTSAX. Get on my level nerds!

>>16014931
Governments may very well force policies like rent controls and/or brutal property taxation that will enslave landlords into a situation where they constantly lose equity. The best assets in such a situation are those with as few counterparties as you can manage

>>16014833
Eh, partially. You’re mistaking overvaluation for liquidity.

>>16015012
The king of funds. Vtwax is a nice alternative if one needs to own the world

>>16015012
>Expense Ratio
>0.04%

lol no

>>16014611

Just buy Vanguard Global Minimum Volatility, then you don't even need bonds to manage drawdowns

>>16015360
>>16015481
>>16015512
I've worked out a system that has done well for me. I basically put all of my money in VTSAX and I trade biotechs on margin. Sometimes it works sometimes it doesn't. But I usually profit quite a bit.

>>16014795
Rents rarely go down, so yes.

>>16015595
But don't expect to make much passive income if your goal is to build wealth in real estate.

>>16014611
It's just a bet on the economy doing well. Which is kind of dumb.

The rates are so low youd need a few hundred k to get anything decent from it. It might help you save faster than a term deposit will. There are probably better investments if you’re poor like me such as education crypto or a good stock.

>>16015613

Who cares about the passive income if the property values go up 400% in thirty years

>>16014813
>you're not being paid a divi on index funds.
VTSAX does

>>16015581
>I've worked out a system that has done well for me. I basically put all of my money in VTSAX and I trade biotechs on margin. Sometimes it works sometimes it doesn't. But I usually profit quite a bit.

I'd rather just own Min Vol. It's the market cap index without the junk lottery stocks.

>>16014611
Op, read this

>>16014670
The problem with this line of thinking is that if market crashes that hard that it will never recover no investment, even gold is going to help you. The only people that will be financially safe are going to be CEOs and other highly useful and skilled people that will be needed.

>>16015305
Based boomerposter
Buying real estate is a long bet on your nation or area
If it becomes a shithole, you end up submerged in shit

>>16015800
>TER: 0.23%
eww

I just want an extremely low cost index that provides broad exposure.

>>16015821
ty anon

>>16015481
Are you saying that’s expensive?

>>16014611
I don't trust Vanguard. They own 10 million shares of EVC, which as you know is a TERRIBLE company. They literally hemorrhage money at this point lol.

>>16015962
>I just want an extremely low cost index that provides broad exposure.

USMV gives you that

https://www.msci.com/documents/10199/f5c0900d-ab44-4bdd-bec7-94761d009094

Look at the drawdown in 2008 vs the S&P 500. Min vol enables you to carry less deadweight of bonds.

>>16014795
>then basically there's no way to guarantee retirement.

Correct, Investments are never guaranteed, But your wealth is safe and always guaranteed if you put it into gold.

>>16016891
>Correct, Investments are never guaranteed, But your wealth is safe and always guaranteed if you put it into gold.

Gold nearly halved after 2011. It's not all or nothing, own gold & gold equities alongside index funds.

>>16014795
The only thing that will always work is trend following, basically. That is, seeing that something works and continuing to do it until it stops working. So yeah, you can invest in stocks but be honest with yourself when you see the trend starting to change. Also keep an eye on those p/e ratios.

>>16016851
Thanks for this anon, pretty hard to believe a higher return with a lower vol.
Somehow I had completely missed these types of funds before.

>>16016891
fucking idiot

Gold has 20-30 year bear markets constantly throughout history

>>16017353
>Thanks for this anon, pretty hard to believe a higher return with a lower vol.
>Somehow I had completely missed these types of funds before.

Google the low vol / momentum barbell.

The price-based factors are the kings, with value you're waiting for circumstances to turn your way.

40% global min vol
30% global momentum (I suggest iShares MSCI funds for both)
20% short term bonds
10% gold miners (something simple like GDX)

If you're into the idea of market timing you could lighten up on bonds and run a simple 12-month moving average on the min vol index. Portfolio Visualizer can run many market timing models and it's free with no registration.

>>16015667
I put 25k into it did I fuck up?

>>16014611
ETFs are the way to go. Very low fees and they pay a dividend.

The only reason to buy index funds is your Jew owned 401k won’t let you buy ETFs.

>>16015012
Bah, I went to go short VTSAX after I saw that post only to find it’s not publicly traded.

>>16016851
Yeah our fund switched over to a full min vol in all styles near october last year. We've been steadily beating the market since. USMV, XMLV, SMMV

>>16017595

Those are all great funds and will beat their benchmarks in terms of risk-adjusted return. I would add some foreign stocks too, you could go 50-50 DGS WisdomTree Emerging Markets SmallCap Dividend Fund & EEMV iShares Emerging min vol.

The market efficiency / Boglehead crowd and the value crowd both hate low vol and can't explain it away.

>>16014611

>Is compounding interest a meme

Yes anon you should spend all your money trading with leverage it’ll work out for you, you’re special

>>16017934
I agree, american funds keeps sucking our dick trying to get us into their largecaps when they cant even beat it.

We do hold foreign, we use mostly managed funds for that though. We see no point in holding europe right now so were mainly in emerging in which lightly managed indexs and etfs tend to underperform their managed counterparts drastically.

>>16014795
real estate is the biggest industry in the U.S., it's a no-brainer to invest in real estate, either directly or via REITs for passive income, people will always need a place to live

unless there's a socialist uprising and the federal govt seizes all property, then you're fucked

>>16015824
>CEO
>highly useful/skilled
Top Kek, you don't seem to understand what a CEO is there for, bullet catcher would be a good description

Look at Nikkei Index. Or PSI Portugal or EuroStoxx. If you zoom out (10+ years). The return is horrible.

>>16018132
based and red pilled

pic related is inflation adjusted, indexing will make you money over time, its fucking garbage in my opinion

>>16014611
It used to be legit. That was until normies caught wind of it and now literally everyone and their boomer parents is all about muh index funds. We’ve got a situation where most people have their net worth tied up in this shit + real estate. In crypto we joke about the can’t cash out meme, but boomers literally can’t cash out this shit simultaneously because only other boomers can afford to buy their bags.

>>16017463
>30% global momentum (I suggest iShares MSCI funds for both)
For example something like IWMO on LSE? Do you think momentum strategies will outperform?

>If you're into the idea of market timing you could lighten up on bonds and run a simple 12-month moving average on the min vol index. Portfolio Visualizer can run many market timing models and it's free with no registration
Do you try to time? Had good results?

The trend is your friend until the end when it bends.

>>16018971
>>30% global momentum (I suggest iShares MSCI funds for both)
>For example something like IWMO on LSE? Do you think momentum strategies will outperform?

I use that one as I am British. I have checked the methodology and it is sound. I use vol targeting on that fund checked once a month, target 10% vol. It's a bit of work to input the daily returns into Excel, but I don't want to hold bonds.

I like low vol and momentum as they're purely price-based and the least likely to be arbed away. Value/growth/quality etc are more like "story" factors, whereas low vol & momentum just remorselessly churn over and re-balance.


>Do you try to time? Had good results?

35% of my money is US min vol vs ex-US min vol vs bonds, spread over 7 lookback periods. I trend follow min vol indexes as they're less prone to whipsaw. Other people use regular market cap indexes but also use filters such as the moving average of US unemployment.

Market timing is not "free", it is normal and expected that 3 out of 4 switches from stocks to cash/bonds will be false alarms. Whatever method you use, it MUST be systematic and you must have a written investment plan which you stick to.

A good place to start is Dual Momentum Investing by Gary Antonacci.

This is my portfolio.

35% dual momentum (us vs ex-us vs bonds)
20% global momentum, 10% vol target
15% global min vol, 9% vol target
20% global small cap value
5% gold miners
5% gold

>>16017514
Any ETF's funds you recommend?

I'm researching on my own, but I've largely been using the boomer index strategy.

I am 37, with my $400k house paid off. $500k in 401k (jew index) and $200k in investment account.

I typically invest around $2k a month outside of 401k and want to start ETF funds.

>>16019270

The best US stock index fund is iShares USMV. You probably want to pair it with a smaller growth or momentum fund so that you don't miss out entirely on frothy bullmarket years like 2017.

5% in a gold miner ETF such as GDX, rebalanced periodically, is an excellent portfolio diversifier, it gold goes ballistic it will be like a leveraged play on gold.

>>16019269
Thanks for the reply, very interesting and I will look into it more. You sound like you have a finance background.

>I use vol targeting on that fund checked once a month, target 10% vol. It's a bit of work to input the daily returns into Excel, but I don't want to hold bonds.
Not really sure how this is done/what you mean desu

What is the safest possible investment out there? Some type of bond? What’s something that will get me 3-5% and if it fails it means there’s basically ww3 and you’ve got way bigger problems than your roi?

>>16019329

https://www.portfoliovisualizer.com/test-market-timing-model?s=y&coreSatellite=false&timingModel=7&startYear=1985&endYear=2019&initialAmount=10000&periodicAdjustment=0&adjustmentAmount=0&inflationAdjusted=true&adjustmentPercentage=0.0&adjustmentFrequency=4&singleAbsoluteMomentum=false&absoluteMomentumAsset=FGOVX&volatilityTarget=10&downsideVolatility=false&outOfMarketAssetType=1&outOfMarketAsset=FGOVX&movingAverageSignal=1&movingAverageType=1&multipleTimingPeriods=false&periodWeighting=2&windowSize=1&windowSizeInDays=105&movingAverageType2=1&windowSize2=10&windowSizeInDays2=105&excludePreviousMonth=false&normalizeReturns=false&volatilityWindowSize=0&volatilityWindowSizeInDays=0&assetsToHold=1&allocationWeights=1&riskControl=false&riskWindowSize=10&riskWindowSizeInDays=0&rebalancePeriod=1&separateSignalAsset=false&tradeExecution=0&comparedAllocation=-1&benchmark=VFINX&timingPeriods%5B0%5D=5&timingUnits%5B0%5D=2&timingWeights%5B0%5D=100&timingUnits%5B1%5D=2&timingWeights%5B1%5D=0&timingUnits%5B2%5D=2&timingWeights%5B2%5D=0&timingUnits%5B3%5D=2&timingWeights%5B3%5D=0&timingUnits%5B4%5D=2&timingWeights%5B4%5D=0&volatilityPeriodUnit=2&volatilityPeriodWeight=0&symbol1=SPY&allocation1_1=100&total1=100

Vol targeting applied to the popular S&P 500 ETF, SPY.

Note that exposure is reduced during market turmoil (Dotcom, GFC 07/08). The max drawdown is halved. This is switching into cash; the returns would be higher if switching into bonds.

The price is lower returns during bullmarkets. So since 2010, buy & hold delivered 12.87%, vol targeting 9.81%. There are also the transaction costs (two trades per calendar month). I prefer vol targeting & trend following to a fixed bond allocation.

>>16019610
probably a dividend ETF, like vanguard VYM and others, don't put all in vanguard ofc

>>16019611
>I prefer vol targeting & trend following to a fixed bond allocation
Makes sense, I think I would prefer this too.
Slightly lower returns do not matter that much if the max drawdown is much less / sharpe ratio much higher. Some small exposure to riskier assets or use of leverage could boost returns too.

Since you seem very knowledgeable, do you have any experience with managed futures? This alternative investment seems to do great during downturns

>>16016696
>figuratively hemorrhage money

>>16019610
Probably any security that has a guaranteed gain for low/no risk if you can find a 3% bond then go for it but
I really like REITs because you get that big dividend and can get great performance but these still involve risk

my favorites are Realty Income (O) for commercial properties, AVB for apartments, CIO for a cheap not as on fire play if you are scared of stocks that have had strong returns already, VTR a healthcare office rental space company, I prefer because they are consolidating nicely on the 3 month chart

REITs give you solid growth and really impressive dividends and millennials are now starting to pay off their student loans and looking for real estate, these should continue to be growth stocks for a forseeable future

>Are index funds just a meme

There has been no better tool for the creation of millionaires in this world than that of the index fund. Without it only wall street would have access to the creation of wealth outside of entrepreneurship. That doesn't mean their without fault. There are more index funds than stocks and index funds are starting to be the majority owners of many top global equities and driving the market.

>>16019730
>Since you seem very knowledgeable, do you have any experience with managed futures? This alternative investment seems to do great during downturns

CTA trend followers provide "insurance" to commercial hedgers. There are more managed future traders today relative to the hedgers so the profits have diminished.

Look at the Barclay CTA index. The profits are no longer there. I was possible in the past to make money using naive strategies. There is more competition today. https://portal.barclayhedge.com/cgi-bin/indices/displayCtaIndex.cgi?indexCat=Barclay-CTA-Indices&indexName=Barclay-CTA-Index

Stocks have an in-built tailwind. I prefer trend following broad equity indices. Anyone can do this with a cheap ETF, or they can use an off-the-shelf product like one of the TrendPilot ETFs. You should read Dual Momentum Investing and come to your own conclusions.

>>16018132
Hmm can I invest in REITs on robinhood?

>>16021087
To buy and hold? Use Schwab or something. Robinhood and IBKR are built for active traders.

>>16019269
I have no clue what you’re even talking about.

>>16016629
You can build your own vtsax for 0% using fractional shares. index funds are for boomers and morons. why would I pay 0.04% when I can easily do it for 0%? use your brain.

>>16014833
Holy shit you people are retarded.
An index fund is a collection of individual stocks. Its just the parcel they come in.

I’m going to buy this book. I’m tired of being stupid

>>16014670
Bull markets ALWAYS overtake recessions and bear markets long-term

>>16021148
something is always true until it isn't. modern stock market has only been around for 100 years. that is in no way long enough to extrapolate that markets always go up over time.

>>16015012
>VTSAX
>STACK
>STACK
>STACK IT UP

>>16016851
There's no guarantee of reduced volatility though. Equities are a risk product, if you want lower volatility, buy a bond index or something.

>>16021105
VSTAX is almost 4000 individual stocks.
What kind of kike sperg sits around and buys 4000 different stocks to save $40 on a $100k investment?

>>16021454
>he doesn't automate his purchases with his brokers api trading

never gonna make it mate. All my trades are done through my brokers api and fully automated. only plebs trade manually in 2019. this is why programmers are gonna rule the world. i can do things people don't even imagine are possible.

>>16021105
Do you work? lol who has time to buy fractions of Amazon? What’s the point? I’d rather just invest in individual stocks at that point. But with volatility the way it’s been and uncertainty, it isn’t recommended

>>16021158
This.

>>16014611
>>16014611
think of passive ETF like a big theatre that seats a lot of people but has only a few small entrances to enter
entrances are big enough to allow a steady flow in to fill all the seats, but what happens when everyone wants to find the exit and leave at the same time?
>this is the next way everyone is gonna lose 70% of the value of their ETFs before they even have time to log in and realize what is going on
you're been warned, best of luck

>>16022490
If an etf looses 70% then everyone holding the index, or individual stocks is fucked the same, or are you implying they somehow can leave faster?

>>16022584
how does selling get triggered when all passive ETFs hold the highest percentage of the large cap stocks? Do you think when selling begins it can easily be stopped? Do you think that when an ETF that holds 100X the daily trading volume of a certain stock begins to lose value the liquidity to easily sell the ETF is there or will the sell price of the ETF reflect the fact that all of a sudden everyone wants out of something that was promoted as liquid but everyone will find out the hard way it is not as promised?

bump for interest and more discussion

far as passive income goes, i'm diversified into lending, only slightly more effort than dumping money in funds

>>16015012
lmao 100% in what timeframe?
don't tell me you're 100% on the year, that's fucking pathetic

>>16023177
Very long timeframe - think decades.
But indexers don't do as well these days pic related.

>>16021383

The MSCI Min Vol indexes have been running since 2008. Every market selloff in the market cap indexes have been less severe in the Min Vol portfolios.

There is no reward for holding riskier stocks. The most volatile deciles underperform. There are a whole bunch of reasons why low vol works. 80% of the upside, 60% of the downside broadly speaking.

A 70-30 min vol strategy will deliver more return per unit of risk than a 60-40 market cap strategy.

>>16023219

Returns outside the US will probably be respectable. I recommend everyone listen to the latest Meb Faber podcast with a guy from GMO https://youtu.be/8XHKaJUKvco

>>16022490

This was tested to destruction in 2008 and SPY didn't fail / become dislocated.

>>16014611
Not necessarily set and forget but passive income definitely yes

>>16021145

After you read that, read the article Larry Swedroe wrote on vol targeting. Bogleheads forum has lots of discussion on these things. It's good to read sceptical opinions.

Whatever you do maybe don't make it all-or-nothing, if you enjoy managing your money once a month, you can use different approaches, just be sure to have a written investment plan and try to be systematic.

>>16023409
Passive indexing was not as popular back then though.

>>16023971

Passive indexes only account for about 6% of trading volume.

This is just concern trolling... indexes get the blame for market volatility, and also the blame for markets going sideways due to lack of active trading.

>>16017514
>Let's pull all our money out of this stock
>Let's put it in an EFT that measures the stock we just sold
ETFs are a secondary market that dries up the primary.

>>16024097
Then only buy physical etfs

Whats the reasoning behind that passive and etfs may induce the next crash? Your pic doesnt even mention one

Hold Vanguard ETFs and use your margin to buy SPY puts.

>>16019269
>20% global momentum, 10% vol target
>15% global min vol, 9% vol target
Have you ever found the need to use leverage to meet those volatility targets?
If so how do you do that on a month-long basis?

>>16019269