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Year-to-date, the five FAANG stocks account for 79% of the performance of the S&P 500. The market cap of FAANG is $3.2 trillion. For the same price, one could own every single company in the S&P 400 and S&P 600 and still have nearly $500 billion left over! That $500 billion could buy five blue chips such as Dollar General, Stanley Black & Decker, Honeywell, Bank of New York, and Aetna, leaving almost $250 billion to spare.
I agree with those findings, except I’d put it the other way around. Frequent trading is often the symptom of an uninformed and undisciplined investor. Likely these people have the same failings when it comes to saving in general, managing debt and maintaining a household budget. But do note that the thread is not about frequent trading (touching). It’s about checking one’s portfolio (looking). I know of no other aspect of human existence where ignorance is considered bliss, where not knowing is preferable to knowing, where remaining unaware is preferable to observing. Not in medicine, not in engineering, not in caring for our loved ones.Hi Hank,
You claim that their study is flawed, but don't directly identify the flaws.
@MJG - You’re somewhat correct. I posed five caveats re the Betterment study. Since the third addressed their business model, I’ll omit it here. Here are the other four caveats which you may consider to be “flaws” in the Betterment study:
First, Betterment commenced operations in 2010. That’s one year into the current ten-year bull market in equities. Those who stayed the course and remained invested in the most aggressive portfolios would be expected to have outperformed. However, that’s a very short time frame on which to base conclusions.
Second, It appears there’s a high probability many of those logins to Betterment’s site were related to changing investment goals or transferring funds. That’s much different than just checking your returns using M* or a portfolio app. In the case of Betterment logins may well signal some type of investment action initiated by the the client (exchange, purchase, sale, withdrawal, etc.) Whereas the simple act of accessing a portfolio tracker does not signal any action - just looking.
Fourth, Betterment automatically rebalances portfolios. While rebalancing actions would in-fact constitute “trades” (among different asset classes), they would not not show up in the account login statistics Betterment is using to bolster its overall conclusions. Therefore, the extent of trading within individual accounts would be distorted towards the low side if only logins were counted.
Fifth, as a broker skimming a set percentage off investors’ assets, Betterment has a vested interest in encouraging clients to remain aggressively invested at all times (increasing its AUM more over time than would otherwise be the case).
My first reference, which you did not address, was a study conducted in the 1990s by university professors.
MJG - I think the following excerpt you posted (from a 35-page chapter) pretty much sums up what the U of M professors were getting at.
"Our most dramatic empirical evidence is provided by the 20 percent of households that trade most often. With average monthly turnover of in excess of 20 percent, these households turn their common stock portfolios over more than twice annually. The gross returns earned by these high-turnover households are unremarkable, and their net returns are anemic."
energy-secretary-perry-true-energy-independence-is-finally-within-our-graspFor too long, Russia has enjoyed near-monopoly status as the main supplier of natural gas to our European allies, and wielded that power as a means of political coercion.
Simply stated, the United States wants to help our partners increase their energy security by increasing the diversity, not only of their supply, but of their suppliers as well.
the-u-s-is-still-the-global-natural-gas-kingThe U.S. may continue to lead the world in natural gas production for a few more years, but the level of proved natural gas reserves implies that our lead could be short-lived.
The Middle East's proved natural gas reserves at the end of 2017 were 2.8 quadrillion cubic feet, nearly ten times U.S. proved reserves of 309 trillion cubic feet. For perspective, U.S. proved reserves are only 4.5% of the global total.
Russia has more proved natural gas reserves than any other country with 1.23 quadrillion cubic feet, followed by Iran with 1.17 quadrillion cubic feet. Total proved natural gas reserves at the end of 2017 were enough to satisfy 2017 global production rates for 52.6 years.
This paragraph actually understates what Allianz did by the way. It was actually far worse:Business played an essential role in Nazi Germany and the Holocaust. IG Farben (Bayer's predecessor) supplied the patent for deadly chemicals used to exterminate millions of Jews. Financial institutions like Allianz and Deutsche Bank meticulously transferred Jewish assets to German hands. Technology developed by IBM tracked and managed the "evacuation" of Jews across Europe. The hair of Jews who were gassed and burned to ash was sold in bulk to textile manufacturers.
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