investment portfolio diversification

port_of_spain

Thrugelmir said:

port_of_spain said:

Thrugelmir said:

port_of_spain said:

What is Lars' key theory? I thought it was that most people don't have an "edge" in investing. Is anybody expecting that to be disproved?

The MSCI world index has been around many decades. The ability for an investor to invest it hasn't. As a consequence there's no historic data to base assertions on. 

How does the non-availability of global tracker funds before a certain date in the past make it more likely that most investors have "edge" now? :puzzled:

I haven't mentioned investors having an edge though.

:sigh:

You have referred to investors having an edge, in that you replied to my post saying that Lars' theory is that most investors don't have an edge, saying that his theory hadn't been properly tested yet, because global tracker funds hadn't been available for long enough. I'm glad that you are now implicitly admitting that this is irrelevant to the plausibility of his theory

In selecting any single index to follow one is making an active decision though. 

And now you're just changing the subject again. As you always do when your previous claim has fallen apart.

bowlhead99

DiggerUK said:

I have been questioned on my figures about drastic drops in the markets from 5 years previous..._

https://www.bbc.co.uk/news/business/market-data

When I go to that link (which you said on another thread showed a picture of 'calamitous falls' over 5 years), it just shows me a list of indexes, commodity prices and exchange rates and their one-day movement (the equities are generally +1 to +4% depending on whether it's a UK, European, US or Japanese index).  There isn't a picture of a 'calamitous fall'  or a 'drastic drop' because it is a one day snapshot.

If I click into an individual index (e.g. S&P 500) and then click again for a 5-year chart, it shows the index rising from 2081 on 17 Apr 2015 to 2790 this week (34% return) but that is only the capital value of the index - dividends received and reinvested would have added another 10% or so. Also, that return is in USD; the return to a UK investor holding an S&P500 index fund would have been about 68% in GBP over the time period, after fund management fees and operating costs . A gain of 68% is hardly a "drastic drop' from 5 years previous".   

An investor in HSBC's 'FTSE All-World' investment fund would have a return of 39.4% in the five years to Thursday noon, after charges. The gross return from FTSE World was greater, at 45.1%, because it excludes the relatively lower performance of emerging markets. If the investor had picked the FTSE Europe ex-UK he'd have made a gross return of just over 15% in sterling terms.

The FTSE 250 is down 7.5% (easily covered by dividend income) while the less-diversified FTSE 100 is down 16.5% (roughly covered by dividend income). An HSBC All-Share tracker is up 0.7% over five years after fees or 51.4% over ten. If the HSBC tracker investor had used a 50:50 blend of FTSE100 and FTSE250 they would have been up 69% over the last decade.

It doesn't really seem to be 'doom and gloom' over longer periods, but what can be seen is that there are large disparities between different equity indexes that hold different types of companies in different parts of the world. So, diversification is useful. 

Username999

We're below where these indices were 5 years ago...
 
Russell 2000 (USA)
DJT Dow Jones Transport (USA)
SSE Composite (China)
DAX (Germany)
CAC (France)
MIB (Italy)
UKX (UK)
ASX 200 (Oz)
NI225 (Japan) - Level(ish)
etc, etc,.

Thrugelmir

port_of_spain said:

Thrugelmir said:

port_of_spain said:

Thrugelmir said:

port_of_spain said:

What is Lars' key theory? I thought it was that most people don't have an "edge" in investing. Is anybody expecting that to be disproved?

The MSCI world index has been around many decades. The ability for an investor to invest it hasn't. As a consequence there's no historic data to base assertions on. 

How does the non-availability of global tracker funds before a certain date in the past make it more likely that most investors have "edge" now? :puzzled:

I haven't mentioned investors having an edge though.

:sigh:

You have referred to investors having an edge, in that you replied to my post saying that Lars' theory is that most investors don't have an edge, saying that his theory hadn't been properly tested yet, because global tracker funds hadn't been available for long enough. I'm glad that you are now implicitly admitting that this is irrelevant to the plausibility of his theory

In selecting any single index to follow one is making an active decision though. 

And now you're just changing the subject again. As you always do when your previous claim has fallen apart.

I made no claims just factual observations. 

Alexland

ChesterDog said:

Those charts are price return, not total return.

To be fair I can see why DiggerUK forgot to factor in distributions as they don't occur in his world.

bowlhead99

Username999 said:

We're below where these indices were 5 years ago...
 
Russell 2000 (USA)

I can see you are using Russell 2000 smaller companies index rather than the Russell 1000 index of largecap stocks because the latter would have given a 44% total return in dollars or 69% in GBP and not have proved your point very well.

Still, the Russell 2000 total return index on 10 April 2015 closed at 5985.52. At the end of this week after the market chaos of recent weeks, it was 6332.21. So, it's about 5.8% higher than where it was five years ago.

Having realised you made an error on the first one, I won't go through all the others.

Username999

No errors, facts are facts.

Linton

Username999 said:

No errors, facts are facts.

But irrelevent if you ignore dividends.

bargainhunter888

Dh6 said:

You had very similar questions to me when I first started my investing journey. If you haven’t already, take a look at Lars Kroijer’s investing demystified series for some excellent advice. 

already watched the 6 intro videos!

port_of_spain

Thrugelmir said:

port_of_spain said:

And now you're just changing the subject again. As you always do when your previous claim has fallen apart.

I made no claims just factual observations. 

You don't seem to understand how conversations work. :shrug: