Anything better than BlackRock Consensus 100 available at the moment

Linton

adindas said:

GeoffTF said:

adindas said:

GeoffTF said:

adindas said:

It will depend on you definition of better. There are a lot of funds, individual stocks are currently performing better than Blackrock Consensus 100 and Vanguard LifeStrategy 100.

That is the past. For "currently performing better" read "have recently performed better". They would have done so at much greater risk than a broadly based tracker fund.

That is why I said it will depend on his definition of better. Not the past, but the current within one year period (say) and to this date there are number of  assets performing better than Black-rock Consensus 100 and Vanguard LifeStrategy 100 if you look for it.

We know what the performance of LifeStrategy 100 was yesterday. We cannot say what the performance of LifeStrategy 100 will be today until their prices are published. We do not know what it will be tomorrow or the day after. The past is in the past. The future is in the future. Even in retrospect, we cannot say what the performance was in a particular second interval for a fund that is priced only once a day. There is no such thing as performance at a single point in time for LifeStrategy 100.

The performance in the last year tells us nothing about what the performance will be in the next year. Funds that did well in the last year are no more likely to do well (in risk adjusted terms before costs) in the next year than those that did badly. We cannot say that a fund is better because it performed better in the last year (assuming that our objective is the make money, or avoid losing it, in the future).

Does anyone know that for sure? Does anyone ever say that ?? Well, I wish someone has a crystal ball.

That is why there are fundamental analysis, technical analysis, why there are analysts/strategists, there is prediction.

There are a lot of thing in the future could be predicted based on historical data with meaningful probability to be right. Do not you watch the weather forecast ? That is predicting what will happen in the future. Economist predicting recession looking into the inverted yield curve. Mathematicians are using extrapolation and modelling to predict the future based on the historical data. If probability, statistics, stochastic are useless why would the people ever

Keep in mind in the stock market people say you do not need to get 100% right, if you could get 60% right is more than enough.

Supppose there was an effective stock market prediction algorithm.  Suppose it predicts that tomorrow the price of a particular stock will drop.  So everybody sells the stock today causing the strock to fall today which makes the prediction algorithm ineffective.

adindas

Linton said:

adindas said:

GeoffTF said:

adindas said:

GeoffTF said:

adindas said:

It will depend on you definition of better. There are a lot of funds, individual stocks are currently performing better than Blackrock Consensus 100 and Vanguard LifeStrategy 100.

That is the past. For "currently performing better" read "have recently performed better". They would have done so at much greater risk than a broadly based tracker fund.

That is why I said it will depend on his definition of better. Not the past, but the current within one year period (say) and to this date there are number of  assets performing better than Black-rock Consensus 100 and Vanguard LifeStrategy 100 if you look for it.

We know what the performance of LifeStrategy 100 was yesterday. We cannot say what the performance of LifeStrategy 100 will be today until their prices are published. We do not know what it will be tomorrow or the day after. The past is in the past. The future is in the future. Even in retrospect, we cannot say what the performance was in a particular second interval for a fund that is priced only once a day. There is no such thing as performance at a single point in time for LifeStrategy 100.

The performance in the last year tells us nothing about what the performance will be in the next year. Funds that did well in the last year are no more likely to do well (in risk adjusted terms before costs) in the next year than those that did badly. We cannot say that a fund is better because it performed better in the last year (assuming that our objective is the make money, or avoid losing it, in the future).

Does anyone know that for sure? Does anyone ever say that ?? Well, I wish someone has a crystal ball.

That is why there are fundamental analysis, technical analysis, why there are analysts/strategists, there is prediction.

There are a lot of thing in the future could be predicted based on historical data with meaningful probability to be right. Do not you watch the weather forecast ? That is predicting what will happen in the future. Economist predicting recession looking into the inverted yield curve. Mathematicians are using extrapolation and modelling to predict the future based on the historical data. If probability, statistics, stochastic are useless why would the people ever

Keep in mind in the stock market people say you do not need to get 100% right, if you could get 60% right is more than enough.

Supppose there was an effective stock market prediction algorithm.  Suppose it predicts that tomorrow the price of a particular stock will drop.  So everybody sells the stock today causing the strock to fall today which makes the prediction algorithm ineffective.

Not really. While there are many investors. How many investors learn about technical Analysis, Fundamental Analysis ?? The news about the stock  market available everyday how many investors watching it ??

Alexland

adindas said:
Not really. While there are many investors. How many investors learn about technical Analysis, Fundamental Analysis ?? 

The news about the stock  market available everyday how many investors watching it ??

I guess all the active investors consider their methods to be smart enough to outsmart the other one that's trying to do the same.
Meanwhile on average the passive and dead investors who are not trading with each other seem to get around double the returns over the very long term.
But yes some active investors will do better even very long term but the odds seem stacked against them. What worked for them may not work in the next period.

adindas

Alexland said:

adindas said:
Not really. While there are many investors. How many investors learn about technical Analysis, Fundamental Analysis ?? 

The news about the stock  market available everyday how many investors watching it ??

I guess all the active investors consider their methods to be smart enough to outsmart the other one that's trying to do the same.
Meanwhile on average the passive and dead investors who are not trading with each other seem to get around double the returns over the very long term.
But yes some active investors will do better even very long term but the odds seem stacked against them. What worked for them may not work in the next period.

That is because you are assuming that they will need to keep using the same strategy, no need to change, improve, modify or change it altogether.

One obvious example. If people currently could earn in saving 7%, 6%+ risk free and if they could still stash it altogether in high interest saving account why would anyone rational would want to put it on bonds, earning less interest riskier??. People will change the strategy once the balance has changed.

bostonerimus

adindas said:

msallen said:

adindas said:

It will depend on you definition of better. There are a lot of funds, individual stocks are currently performing better than Blackrock Consensus 100 and Vanguard LifeStrategy 100.

And ...?  As those funds are very diversified they will achieve a form of "average" return. That being the case there are bound to be lots of things that have recently performed better, and a roughly similar amount that have performed worse.

Correct if it is randomly chosen, not with strategic and methodical ways. And I do not need to repeat about diversification again and again. Excessive diversifications are not a good investment strategy. This is not me saying that it is strategy from billionaires proven investors such as Warren Buffett Charlie, Munger, Peter Lynch, Bill Ackman, Howard Marks, Jim Simons, John Templeton, etc. Most of these proven billionaires investors are contrarians and contrarian do not do excessive diversification.

That is the strategy they have been applying for years. Search it, there are already a lot of links about this in this saving and investment forum.

Some same group of people in this MSE do not like if there is reminder again what these proven billionaires investors have been saying so I suggest you search from previous posts.

You only mention the success stories for such a strategy, not the people who have failed. A well diversified portfolio is best for most people. It made me a millionaire and all the funds I ever invested in were diversified equity and bond funds. I'll never be a billionaire, but I don't need to be one as I'm still financially independent which was my goal.

adindas

bostonerimus said:

adindas said:

msallen said:

adindas said:

It will depend on you definition of better. There are a lot of funds, individual stocks are currently performing better than Blackrock Consensus 100 and Vanguard LifeStrategy 100.

And ...?  As those funds are very diversified they will achieve a form of "average" return. That being the case there are bound to be lots of things that have recently performed better, and a roughly similar amount that have performed worse.

Correct if it is randomly chosen, not with strategic and methodical ways. And I do not need to repeat about diversification again and again. Excessive diversifications are not a good investment strategy. This is not me saying that it is strategy from billionaires proven investors such as Warren Buffett Charlie, Munger, Peter Lynch, Bill Ackman, Howard Marks, Jim Simons, John Templeton, etc. Most of these proven billionaires investors are contrarians and contrarian do not do excessive diversification.

That is the strategy they have been applying for years. Search it, there are already a lot of links about this in this saving and investment forum.

Some same group of people in this MSE do not like if there is reminder again what these proven billionaires investors have been saying so I suggest you search from previous posts.

You only mention the success stories for such a strategy, not the people who have failed. A well diversified portfolio is best for most people. It made me a millionaire and all the funds I ever invested in were diversified equity and bond funds. I'll never be a billionaire, but I don't need to be one as I'm still financially independent which was my goal.

Everyone could become a millionaire if they keep adding money until at least a million in the stock market, they have assets in value of at least 1mil does not he ??

You do not even need to invest in the stock market to become a millionaire.

Everyone with income exceeding the outgoing spending will be financially independent does not he.

What matter is do you outperform the return from the market.

I never say people do not need to diversity I am just confronting the view of the urban myth that excessive diversification is a good strategy for those whose aim is to grow their wealth which I believe the aim of majority of people  when investing. Otherwise why not just keep it all in saving account, safe and secure, risk free.

This is historical return from s&p 500 and T-Bonds. Observe it for those who believe in excessive diversification dilute your return with multi assets diversification and draw you conclusion if you do not diversify it for instance by adding bonds..

eskbanker

adindas said:

bostonerimus said:
A well diversified portfolio is best for most people. It made me a millionaire and all the funds I ever invested in were diversified equity and bond funds. I'll never be a billionaire, but I don't need to be one as I'm still financially independent which was my goal.

What matter is do you outperform the return from the market.

I never say people do not need to diversity I am just confronting the view of the urban myth that excessive diversification is a good strategy.

No, that's exactly where you completely misunderstand the objective of diversification!  Nobody diversifies in an attempt to 'outperform the return from the market', but in order to achieve their financial goals while managing risk - @bostonerimus evidently had some sort of target in mind and used a diversification strategy to optimise the chances of reaching that.  That strategy would quite deliberately have differed from aiming to outperform the market, and, in doing so, would also have reduced the chances of underperforming the market too.

That doesn't invalidate someone trying to outperform the market of course, but that's the answer to a different question....

MK62

If you take an equity "market", maximum diversification occurs when you invest in every company in that market, and minimum diversification occurs when you invest in just one........but if you start from there, then at what point does the diversification level become excessive?
A market tracker fund will invest in every company in that market (it has to really, as otherwise it's not really tracking the market), whereas an actively managed fund will not (to varying degrees)......the jury is still out on that one (and likely always will be), but there's no denying that the maximum diversification, market tracking, approach is a viable option for many.
In any group of fund investors, the "winners" will, of course, have been in active funds, but of those investors who chose the active route, usually more than half would have been better off with a market tracker, and it's maximum diversification (it's often significantly more than half too).......so the maximum (excessive) diversification approach can't be dismissed out of hand.

Alexland

MK62 said:

A market tracker fund will invest in every company in that market (it has to really, as otherwise it's not really tracking the market), whereas an actively managed fund will not (to varying degrees)......the jury is still out on that one (and likely always will be), but there's no denying that the maximum diversification, market tracking, approach is a viable option for many.

To be fair the index trackers use optimal sampling techniques to balance the risk of tracking error against the trading cost of needing to buy into the whole market and sometimes this will cause minor variances but it should hopefully average out over time so they are capturing the market return while keeping costs low.
So with passive you are getting an above average investor return through lower costs and with active you are taking a path where the return expectations are lower in the hope of being one of the few that gets better than passive results which studies suggest is easier to achieve in the short term than consistently over the long term.

GeoffTF

Here is all you need to know:

https://www.youtube.com/watch?v=SwkjqGd8NC4

Here is more evidence that past performance is no guide to the future:

https://www.spglobal.com/spdji/en/documents/education/education-spiva-scorecards-an-overview.pdf

The OP will find out what the IFA's opinion is worth if he asks him to guarantee compensation if his recommendation under performs LifeStrategy 100.