Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • JustAnotherSaver
    • By JustAnotherSaver 11th Aug 19, 8:08 PM
    • 4,430Posts
    • 813Thanks
    JustAnotherSaver
    For those familiar with Lars Kroijer and his views
    • #1
    • 11th Aug 19, 8:08 PM
    For those familiar with Lars Kroijer and his views 11th Aug 19 at 8:08 PM
    I've been meaning to ask this on here for some time now but keep failing to get round to it. There was a bit in the book that if i remember right i wanted to refer to but it looks like i've left the book at work. There was also a thread on here i saw within the last month or so that made me think of this even moreso but i've ended up leaving it that long that i can't find it now. Typical


    Someone on here, i forget who, suggested i read the book, so i started & a lot of what he says seems to make sense to me. "Do you have an edge" gets repeated throughout. No i certainly do not is my answer.

    A couple years ago i had another book suggested to me on here & Lars Kroijer seems to be basically echoing that one, or at least so far as i've read he seems to be echoing it.


    The more i read it the more i agree that not only do i not have an edge but how do 99% of people have an edge? Likely they do not. They're either lucky or i don't know what.


    Which brings me here. From reading in these forums, i could be wrong but it appears that the majority and not the minority believe they have an edge, certainly amongst the regular posters and it makes me wonder - why is that.


    The other book i had (name of which i forget as i've loaned it out although i can try and get the title if it helps any) basically suggested cheap multi asset index trackers (i'm hoping i've got the correct term down there, i have a habit of not doing!) are the best way forward for the average Joe and that historically they outperform managed funds.

    I think this is the point someone on here steps in and says absolutely everything is managed anyway. I don't know enough to argue that point but clearly that person must know what these others are on about when they refer to managed vs otherwise?
    The Lars Kroijer Investing Demystified book i'm reading seems to be going down the same path, as far as i've read.



    The thread on here that i referred to which was posted recently, many spoke of actively managed funds in their portfolio and how it is either totally actively managed or mostly actively managed. So when i'm reading that most people don't have this 'edge' that Lars Kroijer mentions in his book, i'm wondering ... how come most of the regulars on MSE actually do??


    I understand that the responses to this are probably going to result in me questioning life itself and my mind will explode from the pushing and pulling - how people on both sides of the fence make sense and i don't know who's 'right' but what the hell. After reading the book i'm just curious on the stance from others.
Page 2
    • MaxiRobriguez
    • By MaxiRobriguez 13th Aug 19, 2:22 PM
    • 788 Posts
    • 647 Thanks
    MaxiRobriguez
    Whenever you read about an edge it's always a comparison made against individuals vs highly capitalised financial institutions with both parties trying to beat each other in a stock picking game. In such scenarios the individual never has the edge. However, that isn't always the typical scenario.

    There's many many millions of individual investors which are hoovered up by institutions in order to grow their AUM. Quality stock picking takes a backseat against encouraging their customers to buy anything and everything, and the majority of those customers will take the encouragement rather than question it, because the advice is coming from a 'reputable' financial institution.

    I don't think it's possible to get the correct stock picks time and time again but I do think it's possible with a bit of careful planning to avoid the worst of stock market sell-offs and also maintain a bit of cash to pick up the bargains when that does happen. A lot of people will quote "time in the market" but if the big boys genuinely believed that to be the case they wouldn't increase cash allocations in flexible portfolios ever.

    But I'm young and naive still so I'll let you know if was indeed possible in about 40 years.
    • bostonerimus
    • By bostonerimus 13th Aug 19, 3:39 PM
    • 3,585 Posts
    • 2,877 Thanks
    bostonerimus
    Once you give up the idea of “having and edge” and trying to find funds or stocks to make you a quick profit you will be able to relax and let general economic growth and compounding meet your financial goals.
    Misanthrope in search of similar for mutual loathing
    • Linton
    • By Linton 13th Aug 19, 4:12 PM
    • 11,726 Posts
    • 12,183 Thanks
    Linton
    Once you give up the idea of “having an edge” and trying to find funds or stocks to make you a quick profit you will be able to relax and let general economic growth and compounding meet your financial goals.
    Originally posted by bostonerimus

    I agree as far as this statement goes but would go further..... If you need to rely on "The Edge" or come to that a fraction of a % in charges (which tends to be discussed in terms of an Edge) to achieve your objectives you must be taking a high risk of failure. Failure matters in investing, if you dont care about it you are playing or perhaps gambling rather than seriously facing the problems of investing.


    What the statement omits is managing risk, a subject of at least equal importance to performance. That is why I go for active funds that can offer very different asset allocations to the standard market cap based index trackers.
    • Audaxer
    • By Audaxer 13th Aug 19, 6:23 PM
    • 1,986 Posts
    • 1,234 Thanks
    Audaxer
    I agree as far as this statement goes but would go further..... If you need to rely on "The Edge" or come to that a fraction of a % in charges (which tends to be discussed in terms of an Edge) to achieve your objectives you must be taking a high risk of failure. Failure matters in investing, if you dont care about it you are playing or perhaps gambling rather than seriously facing the problems of investing.


    What the statement omits is managing risk, a subject of at least equal importance to performance. That is why I go for active funds that can offer very different asset allocations to the standard market cap based index trackers.
    Originally posted by Linton
    I agree with you if you mean managing volatility. However I think for most people, especially inexperienced investors, a passive approach is less risky than trying to select and manage a portfolio of active funds.
    • bostonerimus
    • By bostonerimus 13th Aug 19, 6:32 PM
    • 3,585 Posts
    • 2,877 Thanks
    bostonerimus
    I agree as far as this statement goes but would go further..... If you need to rely on "The Edge" or come to that a fraction of a % in charges (which tends to be discussed in terms of an Edge) to achieve your objectives you must be taking a high risk of failure. Failure matters in investing, if you dont care about it you are playing or perhaps gambling rather than seriously facing the problems of investing.


    What the statement omits is managing risk, a subject of at least equal importance to performance. That is why I go for active funds that can offer very different asset allocations to the standard market cap based index trackers.
    Originally posted by Linton
    I don’t outsource risk management to fund managers, I do that myself in my asset allocation. I see that as just another un-needed layer
    Misanthrope in search of similar for mutual loathing
    • Alexland
    • By Alexland 13th Aug 19, 8:22 PM
    • 5,838 Posts
    • 5,096 Thanks
    Alexland
    If you need to rely on "The Edge" or come to that a fraction of a % in charges (which tends to be discussed in terms of an Edge) to achieve your objectives you must be taking a high risk of failure.
    Originally posted by Linton
    Although we talk about small fee differences I don't think anyone has suggested fees will make or break their retirement, etc plans. The difference will however compound up over the years and could easily make a 10%+ difference in the outcome. If someone is paying crazy SJP levels of fees it can be the difference between real growth and treading water to inflation.

    Alex
    • iglad
    • By iglad 13th Aug 19, 8:45 PM
    • 206 Posts
    • 59 Thanks
    iglad
    I'm familiar with Lars Kroijer and his views (watched the vids, but not read the book) and I'm also a regular reader of Monevator and his championing of passive investing.

    I also accept I have no edge, don't work in the financial industry, and have never consulted a financial advisor about investing.

    I'm also one of those people that owned up to having 100% active investments in that thread



    Active or passive? Opinion is divided on the matter

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

    I should really go passive I guess, but habit's hard to break and my 30 years of investing by handing money over to edgeless active managers hasn't been so bad, and still got me to a point of contemplating retirement.
    Originally posted by quirkydeptless
    I thought I was the only one 100% active. I picked my funds wisely and have been suitably rewarded.
    • JustAnotherSaver
    • By JustAnotherSaver 13th Aug 19, 9:14 PM
    • 4,430 Posts
    • 813 Thanks
    JustAnotherSaver
    Tim Hale is the other obvious source.
    Originally posted by jim1999
    THAT is the guy!! The other book that i'd read that i said had taken a similar stance to Lars Kroijer (as far as i've read Kroijer's book) - that was the author.

    What I find amusing is that when active fund managers who have entire research teams working for them every day of the week, and direct access to board members and key City influencers cannot reliably beat the index, how on earth someone who spends an hour or two per evening reading financial pages and company accounts thinks they'll reliably beat the index.
    Exactly why i'm in agreement with their viewpoint. I'm not saying their viewpoint is the only one to have and it applies to all because clearly it doesn't.
    But it certainly does with me. I just don't know enough, nowhere near enough, to say that i know better.


    I thought I was the only one 100% active. I picked my funds wisely and have been suitably rewarded.
    Originally posted by iglad
    Congratulations to you I hope your fortune continues.
    • Linton
    • By Linton 13th Aug 19, 10:00 PM
    • 11,726 Posts
    • 12,183 Thanks
    Linton
    I don’t outsource risk management to fund managers, I do that myself in my asset allocation. I see that as just another un-needed layer
    Originally posted by bostonerimus
    I thought you used trackers and government bond funds. These provide one with minimal asset allocation control. The only levers you have are the % equity vs safe bonds and I guess US vs "International" equity. There is far more to asset allocation than this. I am interested in asset allocation in the context of (a partial list):

    - managing correlation in capital performance
    - managing correlation of income sources
    - increasing diversification by choice of %s of large and small companies
    - increasing diversification by use of other investment areas such as infrastructure and property
    - increasing diversification by use of different types of bond
    - avoidance of over-dependence on individual sectors or geographies

    It all depends on your objectives. If you have no actual need for your investments other than for use in an emergency and to bequeath to your children then it may not make sense to go to this level of detail other than out of interest. But then it doesnt matter much what you do as long as it isnt stupid.

    On the other hand if you want a high secure income over an extended time period whilst leaving sufficient for long term care I feel it is very worthwhile.
    • Linton
    • By Linton 13th Aug 19, 10:10 PM
    • 11,726 Posts
    • 12,183 Thanks
    Linton
    Although we talk about small fee differences I don't think anyone has suggested fees will make or break their retirement, etc plans. The difference will however compound up over the years and could easily make a 10%+ difference in the outcome. If someone is paying crazy SJP levels of fees it can be the difference between real growth and treading water to inflation.
    Alex
    Originally posted by Alexland

    Yes but, for example, the choice of VLS100 vs a FTSE World tracker made a difference of 15% in 5 years, far greater than the effect of most fees, SJP excepted. Since both funds invest following the same approach in much the same universe of companies this difference arises from asset allocation. Yet many people here focus on the fees.
    Last edited by Linton; 13-08-2019 at 10:13 PM.
    • Alexland
    • By Alexland 13th Aug 19, 10:33 PM
    • 5,838 Posts
    • 5,096 Thanks
    Alexland
    Yes but, for example, the choice of VLS100 vs a FTSE World tracker made a difference of 15% in 5 years, far greater than the effect of most fees, SJP excepted.
    Originally posted by Linton
    Sure but we talk about that too in the endless UK bias, UK isn't industry diversified, are UK dividends sustainable, is UK a value option, UK is doomed under BoJo/Corbyn, should I invest with Brexit happening, etc threads.
    • bostonerimus
    • By bostonerimus 13th Aug 19, 10:38 PM
    • 3,585 Posts
    • 2,877 Thanks
    bostonerimus
    I thought you used trackers and government bond funds. These provide one with minimal asset allocation control. The only levers you have are the % equity vs safe bonds and I guess US vs "International" equity. There is far more to asset allocation than this. I am interested in asset allocation in the context of (a partial list):

    - managing correlation in capital performance
    - managing correlation of income sources
    - increasing diversification by choice of %s of large and small companies
    - increasing diversification by use of other investment areas such as infrastructure and property
    - increasing diversification by use of different types of bond
    - avoidance of over-dependence on individual sectors or geographies

    It all depends on your objectives. If you have no actual need for your investments other than for use in an emergency and to bequeath to your children then it may not make sense to go to this level of detail other than out of interest. But then it doesnt matter much what you do as long as it isnt stupid.

    On the other hand if you want a high secure income over an extended time period whilst leaving sufficient for long term care I feel it is very worthwhile.
    Originally posted by Linton
    As an active investor I would expect you to slice and dice and have lots of levers to pull. I don’t see the need to worry about such fine detail. I take a very high level approach and use an asset allocation that hopefully will provide some gains and 3% dividends with a reasonable amount of risk given my circumstances and the historical efficient frontier
    Last edited by bostonerimus; 13-08-2019 at 10:47 PM.
    Misanthrope in search of similar for mutual loathing
    • arwain
    • By arwain 13th Aug 19, 10:39 PM
    • 69 Posts
    • 38 Thanks
    arwain
    I thought I was the only one 100% active. I picked my funds wisely and have been suitably rewarded.
    Originally posted by iglad
    I read on another thread that you have only been in these funds since March of this year, and that you chose them by looking at which were the best performing funds over the last few years. This has worked well for you so far and I hope it continues to do so. There seems to be a fair amount of evidence however that this is usually not a very successful strategy over the long term.

    I wonder if once you had selected these top performing funds and read up on them and really understood why they had done well and what might happen to them under different market conditions then that might be a good strategy. I suspect though that not too many people have the ability to do that, I know I certainly don't.
    • badger09
    • By badger09 14th Aug 19, 11:45 AM
    • 7,618 Posts
    • 7,125 Thanks
    badger09
    Yes but, for example, the choice of VLS100 vs a FTSE World tracker made a difference of 15% in 5 years, far greater than the effect of most fees, SJP excepted. Since both funds invest following the same approach in much the same universe of companies this difference arises from asset allocation. Yet many people here focus on the fees.
    Originally posted by Linton
    15% is a substantial difference. May I ask which FTSE World Tracker?
    • Alexland
    • By Alexland 14th Aug 19, 12:11 PM
    • 5,838 Posts
    • 5,096 Thanks
    Alexland
    15% is a substantial difference. May I ask which FTSE World Tracker?
    Originally posted by badger09
    According to the trustnet charting tool the index has returned 91.1% and VLS100 fund has returned 73.2% over the past 5 years so a circa 15% difference after making allowance for reasonable costs in tracking the index. While VLS60 and VLS80 are both good for balanced and adventurous risk if going 100% equities there are better options than VLS100.
    • DrSyn
    • By DrSyn 14th Aug 19, 6:01 PM
    • 812 Posts
    • 502 Thanks
    DrSyn
    Surely even a beginner will have enough curiosity to look at the breakdown of fund before buying it?

    So if they wanted a FTSE World Tracker index fund, they would quickly see that the breakdown of the VLS100 is not the same as the WTF.
    • Prism
    • By Prism 14th Aug 19, 6:06 PM
    • 1,280 Posts
    • 948 Thanks
    Prism
    Surely even a beginner will have enough curiosity to look at the breakdown of fund before buying it?

    So if they wanted a FTSE World Tracker index fund, they would quickly see that the breakdown of the VLS100 is not the same as the WTF.
    Originally posted by DrSyn
    You would think, but I get the feeling that lots of investors have no real clue what the make-up of their funds are - especially with active ones. I tend to have a fund on my watchlist for 6 months to a year before deciding one way or another.
    • quirkydeptless
    • By quirkydeptless 14th Aug 19, 6:56 PM
    • 447 Posts
    • 450 Thanks
    quirkydeptless
    So if they wanted a FTSE World Tracker index fund, they would quickly see that the breakdown of the VLS100 is not the same as the WTF.
    Originally posted by DrSyn

    This is not investment advice.
    Your money may go "down and up and down and up and down and up and down ... down and up and down and up and down and up and down ... I got all tricked up and came up to this thing, lookin' so fire hot, a twenty out of ten..."
    • Audaxer
    • By Audaxer 14th Aug 19, 7:19 PM
    • 1,986 Posts
    • 1,234 Thanks
    Audaxer
    I thought you used trackers and government bond funds. These provide one with minimal asset allocation control. The only levers you have are the % equity vs safe bonds and I guess US vs "International" equity. There is far more to asset allocation than this. I am interested in asset allocation in the context of (a partial list):

    - managing correlation in capital performance
    - managing correlation of income sources
    - increasing diversification by choice of %s of large and small companies
    - increasing diversification by use of other investment areas such as infrastructure and property
    - increasing diversification by use of different types of bond
    - avoidance of over-dependence on individual sectors or geographies

    It all depends on your objectives. If you have no actual need for your investments other than for use in an emergency and to bequeath to your children then it may not make sense to go to this level of detail other than out of interest. But then it doesnt matter much what you do as long as it isnt stupid.

    On the other hand if you want a high secure income over an extended time period whilst leaving sufficient for long term care I feel it is very worthwhile.
    Originally posted by Linton
    Linton, if you are so confident that your strategy will meet your objectives and these objectives require higher returns than you would get from low cost index funds, does that not mean that you do consider that you have an edge? Is it managing the risk and asset allocation that gives you that edge?
    • JustAnotherSaver
    • By JustAnotherSaver 14th Aug 19, 9:14 PM
    • 4,430 Posts
    • 813 Thanks
    JustAnotherSaver
    Surely even a beginner will have enough curiosity to look at the breakdown of fund before buying it?
    Originally posted by DrSyn
    You would think
    Originally posted by Prism
    Not necessarily.



    I'm going to take a stab at the pair of you being quite knowledgable in investing, or at the very least confident, even if that confidence may or may not be misplaced.

    On that note you're seeing it through biased eyes. It's easy to say you'd expect someone to do XYZ when you know that's the least that should be done, but what about the very real possibility that the beginner doesn't actually know what questions to ask? They wouldn't even think of looking at certain areas because they don't know how it works, they don't know what they should or shouldn't be doing.
    And then they're worried about making a huge balls up so they end up doing ... nothing.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,665Posts Today

7,918Users online

Martin's Twitter