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    Sean BrodyHamilton Nolan
    10/07/13 4:45pm

    I think I have asked this before here. Is there a single fund that I can put my money in that tracks the S&P 500?

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      DC8Sean Brody
      10/07/13 4:52pm

      Yes. Vanguard S&P fund. Extremely low fee.

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      sigmaoctansSean Brody
      10/07/13 4:52pm

      Yep, and its really what most people with extra investable income but no patience to become a day trader should actually do.

      https://www.spdrs.com/product/fund.s…

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    ninjaginHamilton Nolan
    10/07/13 4:49pm

    The lesson is to not let the sways of the market dictate when you make decisions. If you do nothing but buy the index every week, whether the market goes up or down, you will will a great return. I think the quote from Buffett is "be greedy when others are fearful and fearful when others are greedy", or something like that. Of course, you could do as well as Warren if you simply have him invest your money, and buy Berkshire.

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      talktotalktoninjagin
      10/07/13 5:27pm

      No, there is no guarantee of a "great return" by playing the broader market in the long term future. Looking back yes, the stock market as a whole has basically trended upward since World War 2, but that doesn't tell the whole story about where our economy, demographics, and politics were all those years that facilitated such growth. There's a lot of things like healthcare, student loans, and inequality that are going to weigh us down in the coming future. A lot of money flowing into the stock market the last few years has in part been the lack of anywhere else to put it and global investors looking for relative safe haven. The bubble is going to pop sooner or later. I don't think "playing" the market is any better of a strategy either tho.

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      ninjagintalktotalkto
      10/07/13 6:38pm

      A consistent investment of buying the same dollar amount of something like an S&P 500 ETF (a fund that follows, and is valued according to, the index), week on week, year after year, has been proven to be a sound way (low-to-no specific risk) to build the value of a portfolio. Berkshire itself uses the S&P 500 as a benchmark against which to grade its own performance. Warren has lectured for countless hours (and I have been at these lectures) that the best way for someone who knows nothing about investment to build value is to simply spread the risk out and buy the index, and take advantage of dollar cost averaging by making regular investments over time. Because there is an inherent risk in securities investments, there are other instruments like bonds or annuities or CDs or your mattress or whatever for more risk-averse investing.

      The timescale you cite (since WW2) is extremely long, and most people (individuals) are investing on a timescale of half that duration. Yes, there are market (systemic) risks, but only you are using the word "guarantee". I'm certainly not. I'm also not sure where you see all this money flowing into the market. Companies (and this goes for institutional investors) have been hedging their bets and hoarding cash in ways I've never seen before. What money there has been in the market has been opportunistic and doesn't qualify as any kind of long-term investment, but we're only seeing that because the costs of borrowing are almost zero. Apart from R&D, there's no incentive to spend cash on anything, or to save it, so it goes off into these short-run low-risk pools to wait for warmer weather. The ordinary incentive to spend in a recovery comes with an increase in demand for goods and services, but this recovery is extremely tepid and the belt-tightening lessons of the recession are still very fresh in managers' minds. We do see some small upticks in buying for durable goods and plant & machinery, but that's because these things wear out or fully depreciate over a 5-10 year timescale... it's not because of some optimistic up-tooling or swelling of demand, that's for sure.

      Bubbles are not new and there have been dozens of them since the depression, across a range of industries and economic sectors. (I get the feeling that another housing bubble is in the offing, personally.) There will always be irrational valuations, and there will always be recessions, but economies do recover from them. If you are one to say "don't invest in the markets because doom is coming in the form of factors X, Y and Z" (and I think that is your message), then I am one who will bet against you.

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    BobbyBoogieHamilton Nolan
    10/07/13 4:35pm

    Most people are not wired to do that. Most people's investment got
    clobbered big time in the last quarter of 2008 and were thus to shell
    shock to even contemplate investing in the market in March 2009.

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      BobbyBoogieBobbyBoogie
      10/07/13 4:38pm

      Ack pushed publish too soon. Just to add that the individual investor has the worst timing in the world when it comes to investing. Look at the inflows and outflows into mutual funds the peak inflows almost always correspond to market tops and peak outflows with market bottoms.

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    caseHamilton Nolan
    10/07/13 4:50pm

    This was actually the advice that was going around my accounting office during those bad years. I started my 401k in 2006, then when everything crashed I upped my contribution. The problem with everything that happened was that so many people were in such a panic and taking money out of banks and out of the stock market, and I even saw commercials pushing for that. I don't know how much better my 401k did since that time, but I know it grew pretty good since 2008.

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      beansandfranksIIIHamilton Nolan
      10/07/13 5:28pm

      You make a mockery of this, but instead of bitching about the unfairness of life and implying that somehow the game is rigged for the rich, sack up and play! Weeks after the 2008 disaster, I bought all I could in companies like Ford, Wells Fargo, GE, and Citibank. Within a year, I did see 100% returns, I sold and felt pretty content with myself.

      Had I lost my ass, I would have been upset, but at least I would have been able to say I had the courage to follow my instincts, instead of just standing on the sidelines bitching about those to make money.

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        WilliamShatnerPantsbeansandfranksIII
        10/07/13 9:32pm

        Is THAT what I should do with these tens of thousands of dollars that I am constantly shitting out of my ass? I'm sure glad the problem isn't people not having money to invest, just not knowing to invest in sure things.

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        beansandfranksIIIWilliamShatnerPants
        10/08/13 9:29am

        It is exactly this mentality that will keep you from ever shitting thousands of dollars. People think that you need lot of money to invest in order to make money. The reality is that if you start with what you have and get the ball rolling, you'll do well. In fact, read up a bit on Mr. Buffet. You may find it more than shocking how little he started investing with a long long time ago.

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      Steve_Buscemi's_OrthodontistHamilton Nolan
      10/07/13 4:39pm

      Pre-2008:

      Me:       So your parents spent 30k on your MBA so you could learn how to buy low and sell high?

      Wife: Fuck you. I don't see you complaining about the extra zero on my paycheck or me helping out with your student loans!

      2013

      Me:       Hon, you ever heard of a leveraged buy-out?

      Wife: Yeah. I learned about it in grad school. It's where one party buys out a company and uses the assets of the purchased company to pay themselves a fee while saddling said company with ridiculous debts. Why?

      Me: I want a divorce.

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        gometzSteve_Buscemi's_Orthodontist
        10/07/13 6:03pm

        So... you got your student loans paid off right?

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      keeplosingburnersHamilton Nolan
      10/07/13 4:47pm

      If you actually managed to change the system such that every single long-term investor only went with the safe bets like the S&P 500, wouldn't their collective rate of return decrease dramatically as prices soar alongside the increased demand?

      Then wouldn't the prices of riskier stocks, now being ignored completely by long-term investors, end up a wiser investment to those with enough money to risk without bankrupting themselves or destroying their retirement plans? Those prices would drop as longer term investors turn to safe properties, and young companies would actually be forced to prove their worth to would-be investors.

      So basically...the market would start to work the way it's supposed to work. Retirement funds see slower, but steady, safe, and more predictable growth. Fewer fees get assessed since there's not really going to be any guesswork involved. And the cycle of booms and busts slows as companies, no longer free to suck up unlimited funds from asshole finance bros gambling with other peoples' cash, actually have to work to prove their worth to investors.

      Sounds like everyone wins.

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        destor23Hamilton Nolan
        10/07/13 4:40pm

        If you bought the S&P 500 Spyder ETF on March 10th, 2009 and have held it through today, your return was 141%.

        So ha, Buffett!

        Except that if you bought Berkshire Hathaway A shares on March 10th, 2009 and have held it through today, your return was 142%.

        A penny for the old guy.

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