Why do posters here have disproportionately higher than average pension funds...

pensionpawn

Deleted_User said:

My allocation is 70% equity and 30% fixed income and I am a passive investor but that’s irrelevant.  There are many paths to success. 

We tend to spend  way too much time on picking funds. In fact, diversified low cost portfolios do well and its the investor behaviour that hurts returns. We always have great arguments justifying us messing with our portfolios but invariably its a human emotion responding to various biases we have, such as “recency”. Studies have shown that investors who literally forget about investments do the best. (And I am sorry I don’t remember the references but if you read books analyzing actual returns secured by investors you will have come across it).  For this reason professionals, including active funds,  use a fixed set of rules or computers to remove human emotion from the decision making process.

“ Reviewing performance“ is ok (I am guilty of curiousity) as long as you have the will power to not make any changes to your IPS (including asset allocation and choice of investment vehicles). That should be reserved for rare, exceptional events, such as major changes in expected lifetime earnings from your job or if much cheaper investment vehicles become available. 

You may be interested in a book that I recently finished reading called "The man who solved the Market", about an American mathematician Jim Simons and the 'quant' revolution (1970s onward). It's an interesting reflection on how the introduction of computers and big data can remove the emotive aspect of investment strategy, and interestingly how major world events, like the present, caused those who created 'the machine' to doubt it's recommendations as 'it just didn't feel right'. Head, or heart, or computer processing....

ComicGeek

pensionpawn said:

Deleted_User said:

My allocation is 70% equity and 30% fixed income and I am a passive investor but that’s irrelevant.  There are many paths to success. 

We tend to spend  way too much time on picking funds. In fact, diversified low cost portfolios do well and its the investor behaviour that hurts returns. We always have great arguments justifying us messing with our portfolios but invariably its a human emotion responding to various biases we have, such as “recency”. Studies have shown that investors who literally forget about investments do the best. (And I am sorry I don’t remember the references but if you read books analyzing actual returns secured by investors you will have come across it).  For this reason professionals, including active funds,  use a fixed set of rules or computers to remove human emotion from the decision making process.

“ Reviewing performance“ is ok (I am guilty of curiousity) as long as you have the will power to not make any changes to your IPS (including asset allocation and choice of investment vehicles). That should be reserved for rare, exceptional events, such as major changes in expected lifetime earnings from your job or if much cheaper investment vehicles become available. 

You may be interested in a book that I recently finished reading called "The man who solved the Market", about an American mathematician Jim Simons and the 'quant' revolution (1970s onward). It's an interesting reflection on how the introduction of computers and big data can remove the emotive aspect of investment strategy, and interestingly how major world events, like the present, caused those who created 'the machine' to doubt it's recommendations as 'it just didn't feel right'. Head, or heart, or computer processing....

But as an engineer it's also important to remember the rule of RIRO - rubbish in, rubbish out. Quality of computer outputs can only ever be as good as the inputs - I've just spent two years working on a construction project where the computer was telling me it wouldn't work, but I can very clearly see in practice now that it works exactly how I thought it would, even though the computer modelling didn't agree. Took a lot of personal conviction to follow through on that, and that's where real world experience pays off, not just relying computer outputs.

[Deleted User]

Linton said:

Thrugelmir said:

Albermarle said:

m_c_s said:

The HSBC Global Strategy Cautious fund in my SIPP is up 1% since Feb 20 and up 4% since Aug 2019
The HSBC Global Strategy Conservative fund in my ISA is up 0.2% since Feb 20 and up 4.1% since Aug 2019

Although low risk (I am retiring in the next 18 months at 56) I am quite happy with their performance.  The corresponding Vanguard 20 fund has performed slightly better although the comparable Vanguard 40 fund is slightly worse:

Vanguard 20 is up 2% since Feb 20 and up 4.5% since Aug 2019
Vanguard 40 is up 0.1% since Feb 20 and up 3.9% since Aug 2019
 
It seems maybe for Vanguard 20 the mix of bonds could be the reason for Vanguards slight over performance. HSBC has property and slightly higher EM equity allocations which may improve performance in the future. 

I have seen recommendations that a safer mix would actually be an 100% equity fund and cash in varying proportions and forget about bonds altogether . Not everyone shares that view for sure but interesting all the same. 

Gilts are effectively cash. Unlike cash there's a predictable return into the future. 

The future of gilts is only predictable if you buy gilts.  Gilt funds are very different.  Most investors dont buy raw gilts.

Real return on gilts is unpredictable. 

pensionpawn

ComicGeek said:

pensionpawn said:

Deleted_User said:

My allocation is 70% equity and 30% fixed income and I am a passive investor but that’s irrelevant.  There are many paths to success. 

We tend to spend  way too much time on picking funds. In fact, diversified low cost portfolios do well and its the investor behaviour that hurts returns. We always have great arguments justifying us messing with our portfolios but invariably its a human emotion responding to various biases we have, such as “recency”. Studies have shown that investors who literally forget about investments do the best. (And I am sorry I don’t remember the references but if you read books analyzing actual returns secured by investors you will have come across it).  For this reason professionals, including active funds,  use a fixed set of rules or computers to remove human emotion from the decision making process.

“ Reviewing performance“ is ok (I am guilty of curiousity) as long as you have the will power to not make any changes to your IPS (including asset allocation and choice of investment vehicles). That should be reserved for rare, exceptional events, such as major changes in expected lifetime earnings from your job or if much cheaper investment vehicles become available. 

You may be interested in a book that I recently finished reading called "The man who solved the Market", about an American mathematician Jim Simons and the 'quant' revolution (1970s onward). It's an interesting reflection on how the introduction of computers and big data can remove the emotive aspect of investment strategy, and interestingly how major world events, like the present, caused those who created 'the machine' to doubt it's recommendations as 'it just didn't feel right'. Head, or heart, or computer processing....

But as an engineer it's also important to remember the rule of RIRO - rubbish in, rubbish out. Quality of computer outputs can only ever be as good as the inputs - I've just spent two years working on a construction project where the computer was telling me it wouldn't work, but I can very clearly see in practice now that it works exactly how I thought it would, even though the computer modelling didn't agree. Took a lot of personal conviction to follow through on that, and that's where real world experience pays off, not just relying computer outputs.

Indeed, or GIGO (garbage in, garbage out)! Indeed, the book covers the search for reliable data as well as creating successful algorithms. Jim Simons wasn't even a financial trader to start with although he's worth around $23B now....

barnstar2077

ComicGeek said:

pensionpawn said:

Deleted_User said:

My allocation is 70% equity and 30% fixed income and I am a passive investor but that’s irrelevant.  There are many paths to success. 

We tend to spend  way too much time on picking funds. In fact, diversified low cost portfolios do well and its the investor behaviour that hurts returns. We always have great arguments justifying us messing with our portfolios but invariably its a human emotion responding to various biases we have, such as “recency”. Studies have shown that investors who literally forget about investments do the best. (And I am sorry I don’t remember the references but if you read books analyzing actual returns secured by investors you will have come across it).  For this reason professionals, including active funds,  use a fixed set of rules or computers to remove human emotion from the decision making process.

“ Reviewing performance“ is ok (I am guilty of curiousity) as long as you have the will power to not make any changes to your IPS (including asset allocation and choice of investment vehicles). That should be reserved for rare, exceptional events, such as major changes in expected lifetime earnings from your job or if much cheaper investment vehicles become available. 

You may be interested in a book that I recently finished reading called "The man who solved the Market", about an American mathematician Jim Simons and the 'quant' revolution (1970s onward). It's an interesting reflection on how the introduction of computers and big data can remove the emotive aspect of investment strategy, and interestingly how major world events, like the present, caused those who created 'the machine' to doubt it's recommendations as 'it just didn't feel right'. Head, or heart, or computer processing....

But as an engineer it's also important to remember the rule of RIRO - rubbish in, rubbish out. Quality of computer outputs can only ever be as good as the inputs - I've just spent two years working on a construction project where the computer was telling me it wouldn't work, but I can very clearly see in practice now that it works exactly how I thought it would, even though the computer modelling didn't agree. Took a lot of personal conviction to follow through on that, and that's where real world experience pays off, not just relying computer outputs.

I hope there are not lives at stake with this construction project?

ComicGeek

barnstar2077 said:

ComicGeek said:

pensionpawn said:

Deleted_User said:

My allocation is 70% equity and 30% fixed income and I am a passive investor but that’s irrelevant.  There are many paths to success. 

We tend to spend  way too much time on picking funds. In fact, diversified low cost portfolios do well and its the investor behaviour that hurts returns. We always have great arguments justifying us messing with our portfolios but invariably its a human emotion responding to various biases we have, such as “recency”. Studies have shown that investors who literally forget about investments do the best. (And I am sorry I don’t remember the references but if you read books analyzing actual returns secured by investors you will have come across it).  For this reason professionals, including active funds,  use a fixed set of rules or computers to remove human emotion from the decision making process.

“ Reviewing performance“ is ok (I am guilty of curiousity) as long as you have the will power to not make any changes to your IPS (including asset allocation and choice of investment vehicles). That should be reserved for rare, exceptional events, such as major changes in expected lifetime earnings from your job or if much cheaper investment vehicles become available. 

You may be interested in a book that I recently finished reading called "The man who solved the Market", about an American mathematician Jim Simons and the 'quant' revolution (1970s onward). It's an interesting reflection on how the introduction of computers and big data can remove the emotive aspect of investment strategy, and interestingly how major world events, like the present, caused those who created 'the machine' to doubt it's recommendations as 'it just didn't feel right'. Head, or heart, or computer processing....

But as an engineer it's also important to remember the rule of RIRO - rubbish in, rubbish out. Quality of computer outputs can only ever be as good as the inputs - I've just spent two years working on a construction project where the computer was telling me it wouldn't work, but I can very clearly see in practice now that it works exactly how I thought it would, even though the computer modelling didn't agree. Took a lot of personal conviction to follow through on that, and that's where real world experience pays off, not just relying computer outputs.

I hope there are not lives at stake with this construction project?

No, something far more valuable, wine

Albermarle

Studies have shown that investors who literally forget about investments do the best. (And I am sorry I don’t remember the references but if you read books analyzing actual returns secured by investors you will have come across it)

Maybe you meant this 

A news item that has gotten a lot of attention recently concerned an internal performance review of Fidelity accounts to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old 401(k) leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets. 

My speculation on why dead people beat everyone else is that there is no temptation to employ recency bias and sell a stock simply because the price of the company went down or they assume that the recent bad economic conditions will continue perpetually into the future.

[Deleted User]

Albermarle said:

Studies have shown that investors who literally forget about investments do the best. (And I am sorry I don’t remember the references but if you read books analyzing actual returns secured by investors you will have come across it)

Maybe you meant this 

A news item that has gotten a lot of attention recently concerned an internal performance review of Fidelity accounts to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old 401(k) leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets. 

My speculation on why dead people beat everyone else is that there is no temptation to employ recency bias and sell a stock simply because the price of the company went down or they assume that the recent bad economic conditions will continue perpetually into the future.

Not this particular one, but I’ve come across very similar studies. Very consistent.  Dying is the best thing you can do to maximize future returns. 

Thrugelmir

Albermarle said:

Studies have shown that investors who literally forget about investments do the best. (And I am sorry I don’t remember the references but if you read books analyzing actual returns secured by investors you will have come across it)

Maybe you meant this 

A news item that has gotten a lot of attention recently concerned an internal performance review of Fidelity accounts to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old 401(k) leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets. 

My speculation on why dead people beat everyone else is that there is no temptation to employ recency bias and sell a stock simply because the price of the company went down or they assume that the recent bad economic conditions will continue perpetually into the future.

Most likely invested in the S&P 500.  No other distractions. 

Takedap

Deleted_User said:

Albermarle said:

Studies have shown that investors who literally forget about investments do the best. (And I am sorry I don’t remember the references but if you read books analyzing actual returns secured by investors you will have come across it)

Maybe you meant this 

A news item that has gotten a lot of attention recently concerned an internal performance review of Fidelity accounts to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old 401(k) leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets. 

My speculation on why dead people beat everyone else is that there is no temptation to employ recency bias and sell a stock simply because the price of the company went down or they assume that the recent bad economic conditions will continue perpetually into the future.

Not this particular one, but I’ve come across very similar studies. Very consistent.  Dying is the best thing you can do to maximize future returns. 

It certainly reduces your outgoing expenses.