Author Topic: I want out of investing - options  (Read 3019 times)

stahleyp

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 3108
Re: I want out of investing - options
« Reply #10 on: November 28, 2019, 01:41:22 PM »
The vast, vast majority of managers fail to beat the index, at least in US markets. And US managers have significantly lower expense ratios than Canadians it seems.

Some are skilled but not many. The skillful ones are very much worth their fee. However, trying to determine skill from luck is very, very difficult.
Paul


no_free_lunch

  • Hero Member
  • *****
  • Posts: 1599
Re: I want out of investing - options
« Reply #11 on: November 28, 2019, 01:44:35 PM »
The mutual fund / etf debate comes down to my belief that most of the market is in a bubble and that value investing isn't dead.   I know from my own investing experience that are still stocks that are ballpark reasonable, that is what I want to own.  I don't want to own everything.  I am hoping to find mutual funds that have similar style to myself.

I have already seen a large divergence in small cap canadian stocks.  There is an ishares etf xcs.to which has basically gone nowhere for a decade while many small cap funds are up 50-100%.  I also have a small investment in one of the funds and had the same experience so I am not really cherry picking.  It just makes sense when you look at the garbage in the etf vs what the funds are holding.

The other way to look at it is risk reduction.  We are financially far enough along that I don't need to swing for the fences, I can get by with singles.   If I can find a fund that can use a garp or qarp strategy, I can see how that might have a tighter range of outcomes.   I really don't care if I get 7% when the market gets 10% over the next decade, I just don't want to get a -2%.

The other way to look at it, if we don't believe that a fund can out-perform then why are we on this site?  Obviously we still believe there is alpha out there.

It is not so much that I can't do the type of investing we do on this site or don't think that it will work.  Like Lakesider I will continue to do some investing on individual high conviction names.  For entertainment if nothing else.  I just simply do not have time for a full portfolio.  A small position is still like a years worth of saving so even small positions take me 4,5,6 hours and then there are dozens of positions that i research and drop.  Just too much work.
« Last Edit: November 28, 2019, 01:47:08 PM by no_free_lunch »

RichardGibbons

  • Hero Member
  • *****
  • Posts: 666
Re: I want out of investing - options
« Reply #12 on: November 28, 2019, 01:47:32 PM »
If it's literally the time that you spend that's bothering you, you could potentially change your process to take less time.

For instance, as I've gotten older, I've cared much less about details and much more about competitive advantage. I'd guess that transition has reduced my time by two-thirds or something. If you immediately eliminate all businesses that don't have an obvious long term competitive advantage--irrespective of all other criteria--you dramatically reduce both the number of businesses you need to look at and the amount of time required to analyse each business.  Then, once you've discovered a business with competitive advantage, you just need to decide if the price is fair or cheap, and that's pretty quick to do as well.

What's more, if you've bought a business with a sustainable competitive advantage, you probably don't have to think about selling it for a long time which reduces the amount of time you have to spend as well. (Particularly since a business with a sustainable competitive advantage has to get quite overvalued before it's worthwhile selling and triggering taxes on the capital gains.)

no_free_lunch

  • Hero Member
  • *****
  • Posts: 1599
Re: I want out of investing - options
« Reply #13 on: November 28, 2019, 01:50:09 PM »
On BRK, I have about 7% in it.  How do you determine how high to go?  I know it is hugely diversified but can we really think of it as an ETF?  Also, what of Warren's age, does it really not matter?

Gregmal

  • Hero Member
  • *****
  • Posts: 2513
Re: I want out of investing - options
« Reply #14 on: November 28, 2019, 02:02:22 PM »
They key is to use a little bit of brain power and then just throw a net. Cyber security to me is such a no brainer. I bought CIBR years ago and donít even look at it. Like ever. It just prints money. Im sure there are others out there like that. With such specific theme based ETFs it really shouldnít be too hard to find stuff with satisfactory returns.

Rod

  • Full Member
  • ***
  • Posts: 195
Re: I want out of investing - options
« Reply #15 on: November 28, 2019, 02:29:17 PM »
What I'm about to say is probably useless to you given that you like broad diversification, but here goes:

In recent years I've been owning fewer and fewer stocks to the point where I now will usually own only three or four. I made a conscious decision to focus only on "no-brainer" ideas. The kind of idea that I might find only once every three or four years. By "no-brainer" I mean a stock that is a great company or very solid infrastructure like asset that is selling for one-third or less of my estimate of intrinsic value. Waiting for no-brainers means letting a bunch of good ideas go by. When I find the no-brainer idea I will put 30% or more into it. The fact that the undervaluation is so extreme means I can hold it for many years and make high returns the whole way. I usually think in terms of making 10x in 10 years. A single idea like that can replace 10 or 15 more typical value ideas because I'm putting maybe 3x more money into and holding it 5x longer. So I've found it to be a huge time saver on research. It's also more fun in my opinion to focus on only your best ideas and hold them long term. So far, it's working very well.

clutch

  • Sr. Member
  • ****
  • Posts: 366
Re: I want out of investing - options
« Reply #16 on: November 28, 2019, 02:46:31 PM »
I switched my RRSP strategy this year to buy a single ETF (VOO). It feels incredibly liberating -- more time for my family and hobbies and fewer distractions at work. As much as I liked learning about investing and businesses, I have learned that there are other things in life I enjoy more.

FYI, I came to this conclusion after about 5 years of stock picking and my performance closely matching the returns of 90% S&P + 10% bonds. I knew I wasn't good enough and it wasn't worth the risk/time/effort.

Spekulatius

  • Hero Member
  • *****
  • Posts: 3532
Re: I want out of investing - options
« Reply #17 on: November 28, 2019, 02:58:58 PM »
For a low maintenance portfolio, I would probably put my money into index funds, some US, some world Index fund like VTWSX (or equivalent). If you want a value component, one could think about and equal weight cap fund for mid or small cap exposure  and maybe some BRK. I also second GOOG if exposure to tech is considered, but I would keep it smaller than BRK, which is diversified by itself.

Canada is a strange stock market since there is so much exposure to commodities and banks. If OP wants exposure to this, he could just buy a few individual Canadian banks stocks with an equal weight. if I wanted exposure to energy, I would just buy an oil major like RDS or CVX or a bit SU. Then rebalance this once a year.
Life is too short for cheap beer and wine.

stahleyp

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 3108
Re: I want out of investing - options
« Reply #18 on: November 28, 2019, 03:31:57 PM »
What I'm about to say is probably useless to you given that you like broad diversification, but here goes:

In recent years I've been owning fewer and fewer stocks to the point where I now will usually own only three or four. I made a conscious decision to focus only on "no-brainer" ideas. The kind of idea that I might find only once every three or four years. By "no-brainer" I mean a stock that is a great company or very solid infrastructure like asset that is selling for one-third or less of my estimate of intrinsic value. Waiting for no-brainers means letting a bunch of good ideas go by. When I find the no-brainer idea I will put 30% or more into it. The fact that the undervaluation is so extreme means I can hold it for many years and make high returns the whole way. I usually think in terms of making 10x in 10 years. A single idea like that can replace 10 or 15 more typical value ideas because I'm putting maybe 3x more money into and holding it 5x longer. So I've found it to be a huge time saver on research. It's also more fun in my opinion to focus on only your best ideas and hold them long term. So far, it's working very well.

What's your performance been like?
Paul

coc

  • Full Member
  • ***
  • Posts: 207
Re: I want out of investing - options
« Reply #19 on: November 28, 2019, 04:15:20 PM »
What I'm about to say is probably useless to you given that you like broad diversification, but here goes:

In recent years I've been owning fewer and fewer stocks to the point where I now will usually own only three or four. I made a conscious decision to focus only on "no-brainer" ideas. The kind of idea that I might find only once every three or four years. By "no-brainer" I mean a stock that is a great company or very solid infrastructure like asset that is selling for one-third or less of my estimate of intrinsic value. Waiting for no-brainers means letting a bunch of good ideas go by. When I find the no-brainer idea I will put 30% or more into it. The fact that the undervaluation is so extreme means I can hold it for many years and make high returns the whole way. I usually think in terms of making 10x in 10 years. A single idea like that can replace 10 or 15 more typical value ideas because I'm putting maybe 3x more money into and holding it 5x longer. So I've found it to be a huge time saver on research. It's also more fun in my opinion to focus on only your best ideas and hold them long term. So far, it's working very well.

Out of curiosity, what ideas have fallen into this net since you switched? How long has it been? No need to give current ideas if you donít want to share them, older ones are fine.