Thread 61068093

Investing is solved. Diversification is the only "free lunch" there is in investing, as it allows to reduce risk without reducing expected returns. Thus, the optimal investing strategy is to invest in low-fee total market index funds.

But 2008 was caused by “diversified” investments failing. The entire point was that just lumping millions of shit loans together doesn’t magically reduce their risk, just like lumping hundreds of bad companies together doesn’t magically create value.

>>61068093 (OP)
stop sucking ben felix's dick

>>61068093 (OP)
Those are some of the worst performing index funds imaginable. The only free lunch is betting that commodities, cash, companies, technology, and every other asset will become less scarce that scarcity itself (bitcoin).

>>61068103
It depends on how correlated the performances are.
Lumping hundreds of bad companies together does create value, PROVIDED THEY DON'T ALL FAIL AT ONCE.
The assumption this wouldn't happen in the case of home loans was precisely the issue, but historically the OP is correct. Just holding the market is hard to beat in the long term.

>>61068122
nice ad hominem, but you did not refute the point

>>61068689
>provided they don’t all fail at once
And who says they won’t. They all are very dependent upon the same consumer bases.

>>61068093 (OP)
Right when joe schmo thinks they have everything figured out is exactly when the markets will fuck you. Welcome to the ETF bubble.

All it takes it is one of the Mag 7 falling down, and imagine how many fucking blended funds and retirements get wiped out.

>>61068093 (OP)
>it allows to reduce risk without reducing expected returns
Sorry to tell you but reckless and lucky will always be on top of the pyramid.

>>61072511
There being more ETFs than stocks isn't really an issue though. There are infinite combinations of stocks you can mix to create an ETF, whereas most companies are only listed on the exchange once.

>>61072588
>>61068689
>market fundamentals are elevated entirely across the board to historic levels from set and forget ETF investing
>”There is no HECKING way that these assets are correlated and that this level of diversification can fail”
Kekw the memes write themselves

>>61068093 (OP)
>"Diversified" portfolio
>Everything in the portfolio crashes at the exact same time
2 uncorrelated assets are superior to 500 correlated assets.

>>61072726
>Muh fundamentals

No one cares

>>61072740
Yes exactly, you think passive ETF’s have no effect on the broad market because your a retard that sticks your fingers in your ears and says this time is different.

>>61068103
>lumps a bunch of home loans together
>fails
>see, told you that diversified portfolios fail!
Except that’s not diversification you doofus. VOO, VT, VTI, etc. are diversified. They hold hundreds to thousands of companies. So long as capitalism doesn’t end, you are bound to make a profit over the long term. However, the opportunity cost is that you might average a seven percent return over ten years versus going balls-deep on Tesla and bitcoin.

>>61072726
The issue isn’t broad overvaluation, it’s that most of the market is ten or so companies. So when they dump, our eyeballs are going to bleed.

>>61072823
>So long as capitalism doesn’t end, you are bound to make a profit over the long term.
These two are not exclusive, state owned or privately owned enterprises may prosper and publicly traded companies die out, and thus capitalism survives but VOO/VT/VTI die.

>>61072861
Market fundamentals are above historic averages in the broad market. CAPE for example. I’m simply stating facts. There’s certainly bull and bear cases people love to build off these facts.

>>61072823
>But my companies are so hecking diversified! This China slop has a totally different consumer market than that consumer slop
K dog. You do you, just here to tell you that you’re retarded if you can’t piece together how on earth broad equities could be a bubble the same as broad fixed income was in 2008.

>>61068093 (OP)
why do you say things like this like it's correct. the optimal strategy will always be a high sharpe HFT strategy

>>61073186
I mean… that’s an extreme case. The U.S. doesn’t have many notable private companies, more ones that haven’t IPOed yet.
>>61073227
We’re talking about five hundred companies versus mortgages. Surely you’re not serious.

>>61073686
>but we’re talking millions of mortgages vs only 500 hundred companies, you can’t be serious
Snooze, if you want to be closed minded I can’t help you, I’m sure you’ll learn when forced.

u mean low cost GROWTH index funds