Brendan Burgess
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I think your performance would be the same, but you should be a lot cheaper.
Brendan
The Perils of Shorting: A Real Life Example
- Thread starter Colm Fagan
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I think your performance would be the same, but you should be a lot cheaper.
Brendan
Whoever promises to invest in the most diversified portfolio, at the lowest cost.
You need to stop moving from the attic to the kitchen.
The fund manager could influence the price , sell a lot of current stock into the market in the hope of driving the price down so you can buy back more kinda thing , i'm not sure if fund managers do that but if your buying a lot you have more influence over the price , so they could in theory get the price cheaper than an individual.
Brendan Burgess
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Hi Fella
I think it works the other way around.
If Gordon decides to buy €100k worth of stock in,say, Ryanair, it won't have any impact on the price whatsoever.
But if a fund manager invests €100m, it will push the price up, so he will pay more than Gordon.
So I think I will put my money with Gordon - in the kitchen or the attic.
Brendan
I think it works the other way around.
If Gordon decides to buy €100k worth of stock in,say, Ryanair, it won't have any impact on the price whatsoever.
But if a fund manager invests €100m, it will push the price up, so he will pay more than Gordon.
So I think I will put my money with Gordon - in the kitchen or the attic.
Brendan
I think but I could be wrong that its possible to influence the market if a large fund want to buy a stock , if they already own the stock they could quickly dump a lot of that onto the market in the hope that others will see it dropping and sell also , then they buy more at a lower price. Anyway thats way off track .
Market manipulation of that nature is illegal.
Colm Fagan
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Gosh, I'm getting lost at this stage, being dragged from the attic to the kitchen! In the circumstances, I think I'll go outdoors and join @Gordon Gekko on the golf course!
This is a peculiar type of golf competition, in that most people prefer not to play themselves. Instead, they want to link their fortunes to Tiger, Rory, or whoever their favourite golfer (i.e. fund manager) happens to be - for a fee. There are a few of us however who like to play our own game rather than have a professional play on our behalf.
Contrary to what Gordon says, I've been playing Augusta National for 23 years now , all of it as an amateur. I have never entered a competition and haven't kept a detailed record of my scores over the entire period, but I haven't made a fool of myself. The most important point is that I've enjoyed my golf and I have knocked down good scores, as outlined in #34 and #38 above. And I haven't had to pay a penny to the professionals. I'm happy to continue playing my own game, despite Gordon exhorting me to give it up and let the professionals play on my behalf.
The big limitation of the golfing analogy is that there aren't professionals out there who can beat the amateurs hands down. I'm not going to repeat the Abigail and Beatrice parable of my "A guy in the attic" article, but the basic message is that, 99% of the time (once again, not to be taken literally, but it's of the right order), market prices reflect the accumulated knowledge of the top professionals, so the ordinary Joe Blog will do just as well as the professionals for 99% of the holes. That's before charges. After charges, they have a good chance of doing better than the professionals.
As with all analogies, this one has its limitations, the biggest of which is mentioned at the end of this post, but we can still take a few lessons from it.
This is a peculiar type of golf competition, in that most people prefer not to play themselves. Instead, they want to link their fortunes to Tiger, Rory, or whoever their favourite golfer (i.e. fund manager) happens to be - for a fee. There are a few of us however who like to play our own game rather than have a professional play on our behalf.
Contrary to what Gordon says, I've been playing Augusta National for 23 years now , all of it as an amateur. I have never entered a competition and haven't kept a detailed record of my scores over the entire period, but I haven't made a fool of myself. The most important point is that I've enjoyed my golf and I have knocked down good scores, as outlined in #34 and #38 above. And I haven't had to pay a penny to the professionals. I'm happy to continue playing my own game, despite Gordon exhorting me to give it up and let the professionals play on my behalf.
The big limitation of the golfing analogy is that there aren't professionals out there who can beat the amateurs hands down. I'm not going to repeat the Abigail and Beatrice parable of my "A guy in the attic" article, but the basic message is that, 99% of the time (once again, not to be taken literally, but it's of the right order), market prices reflect the accumulated knowledge of the top professionals, so the ordinary Joe Blog will do just as well as the professionals for 99% of the holes. That's before charges. After charges, they have a good chance of doing better than the professionals.
Gordon Gekko
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But Buffett doesn’t manage stocks on a one year basis. It would be very dangerous to base one’s decision on such a short time-horizon.
Brendan Burgess
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Agree with Gordon on how meaningless this would be.
But it could be fun to have a competition on the price of Tesla at the end of 2020 - a bit like the competition on Bitcoin.
Brendan
Colm Fagan
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Brendan
I'm happy to play the game, recognising that it's only a game. I think you guys know my long-term forecast: I don't plan to close my position until the price has fallen to less than $200. I'll have to give some thought to whether it will have fallen to that level by the end of next year.
You'll have to include a rule that the price will be adjusted for any rights issues or stock splits/ consolidation in the meantime. That should be straightforward.
I'm happy to play the game, recognising that it's only a game. I think you guys know my long-term forecast: I don't plan to close my position until the price has fallen to less than $200. I'll have to give some thought to whether it will have fallen to that level by the end of next year.
You'll have to include a rule that the price will be adjusted for any rights issues or stock splits/ consolidation in the meantime. That should be straightforward.
It would show how meaningless following a stock picker is , some people would be well up and others well down and I wouldn't expect those that know more about stocks and investing to do any better than your average Joe
Gordon Gekko
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But it wouldn’t be “Colm vs Gordon”. Colm runs his own concentrated equity portfolio; I outsource the running of mine because I believe that neither Colm nor I have the expertise or resources to manage money successfully. I also believe that such a concentrated approach is unwise.
Something in the back of my mind tells me that Colm started doing this in 2014, is that correct? I just checked and the annualised return from my equity portfolio for the last 5 years is 10.16%. The AMC is 0.45%, and there is no VAT, no bid/offer spread, or no transaction or trail commissions payable. The ‘Reduction in Yield’ is only marginally higher than the AMC so I would contend that my costs are circa 0.5% per annum.
That’s what I’d be throwing into the pot in terms of comparing “my performance” with Colm’s over the last 5 years; 9.66% annualised. And that’s the approach I’ll hopefully be taking over the coming years.
People are entitled to their views, but I don’t believe that the “man in the attic” (or kitchen!) has much of a chance of doing better. In fact, as I’ve said before, I think he’ll do materially worse.
Something in the back of my mind tells me that Colm started doing this in 2014, is that correct? I just checked and the annualised return from my equity portfolio for the last 5 years is 10.16%. The AMC is 0.45%, and there is no VAT, no bid/offer spread, or no transaction or trail commissions payable. The ‘Reduction in Yield’ is only marginally higher than the AMC so I would contend that my costs are circa 0.5% per annum.
That’s what I’d be throwing into the pot in terms of comparing “my performance” with Colm’s over the last 5 years; 9.66% annualised. And that’s the approach I’ll hopefully be taking over the coming years.
People are entitled to their views, but I don’t believe that the “man in the attic” (or kitchen!) has much of a chance of doing better. In fact, as I’ve said before, I think he’ll do materially worse.
$150 for me so!
elacsaplau
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Gordon,
Do you mind sharing how you implement this strategy please? - i.e. what investment vehicle/mechanism you are using; what index are you tracking, etc.?
At a general level, I have very little doubt that a low cost index tracking approach is the best solution for most investors most of the time - so long as the index being tracked is sensible! And low cost is really important - I read somewhere recently (perhaps on this site)…….in investment you get what you don't pay for!
Do you mind sharing how you implement this strategy please? - i.e. what investment vehicle/mechanism you are using; what index are you tracking, etc.?
At a general level, I have very little doubt that a low cost index tracking approach is the best solution for most investors most of the time - so long as the index being tracked is sensible! And low cost is really important - I read somewhere recently (perhaps on this site)…….in investment you get what you don't pay for!
Colm Fagan
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Gordon
I really don't understand your preoccupation with how my portfolio has performed over the last 5, 10 years or whatever, but if you insist on doiing the comparison, I suggest you compare like with like. The figures I gave were for my total portfolio, including my ARF/AMRF, my non-exempt investments, spread bet accounts, and a deposit account. They were also net of the ARF/AMRF provider's charges, bank charges on ARF (and other) withdrawals, etc. You gave figures for your equity portfolio only. I don't know what proportion of your total investments that represents. To make the comparison fair, you should include all your investments, including any post office savings accounts, bank deposit accounts, etc. That's what I included in the figures I gave.
It so happens that I put practically everything into "equities", but I don't see "equities" as you see them. For example, one of my equity holdings has a dividend yield of more than 7% a year, so I consider it as pseudo corporate bond, the property unit trust could be classified as a property investment, etc.
Gordon Gekko
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No. Instead, can you help us to compare like with like and disclose how your share investments have done over the last 5 years?
i.e. total return gross of tax and net of costs (so whether it’s ARF, pension, or personal shouldn’t matter). I have my figure and it‘s 9.66% annualised.
It would be helpful to exclude the deposits; I have cash equal to approximately 10% of the value of my equity portfolio and it earns zero, but I don’t see it as relevant to the discussion.
i.e. total return gross of tax and net of costs (so whether it’s ARF, pension, or personal shouldn’t matter). I have my figure and it‘s 9.66% annualised.
It would be helpful to exclude the deposits; I have cash equal to approximately 10% of the value of my equity portfolio and it earns zero, but I don’t see it as relevant to the discussion.