Comments on: My Future Is Not a Game http://thefinancebuff.com/my-future-is-not-a-game.html like a friend telling you about money ... Fri, 10 Feb 2012 17:31:35 +0000 hourly 1 http://wordpress.org/?v=3.1.2 By: RetirementInvestingToday http://thefinancebuff.com/my-future-is-not-a-game.html#comment-3186 RetirementInvestingToday Sat, 09 Jan 2010 21:07:01 +0000 http://thefinancebuff.com/2010/01/my-future-is-not-a-game.html#comment-3186 Unfortunately in real life my strategy didn't beat the market last year. Using a very basic asset allocation which would have been 78% stocks and 22% bonds I could have achieved an increase of 23.7% (not taking fees into account). Instead I flex my asset allocation by using a stock market valuation method which is the ratio of the price divided by the average of the previous 10 year earnings as proposed by Yale Professor Shiller. This resulted in a 2009 return of 21.5% (after fees). Guess that means Jay's comment holds true. Although I guess that the fact I lost means that somewhere in the world somebody won. Unfortunately in real life my strategy didn’t beat the market last year. Using a very basic asset allocation which would have been 78% stocks and 22% bonds I could have achieved an increase of 23.7% (not taking fees into account).

Instead I flex my asset allocation by using a stock market valuation method which is the ratio of the price divided by the average of the previous 10 year earnings as proposed by Yale Professor Shiller. This resulted in a 2009 return of 21.5% (after fees).

Guess that means Jay’s comment holds true. Although I guess that the fact I lost means that somewhere in the world somebody won.

]]> By: Pelon http://thefinancebuff.com/my-future-is-not-a-game.html#comment-3174 Pelon Thu, 07 Jan 2010 19:57:10 +0000 http://thefinancebuff.com/2010/01/my-future-is-not-a-game.html#comment-3174 I don't agree that you shouldn't "play" the market with real money. If someone enjoys stock picking, having actual money involved can make it more interesting. Like gambling, though, the best approach is to never use more money than you can stand to lose. I don’t agree that you shouldn’t “play” the market with real money. If someone enjoys stock picking, having actual money involved can make it more interesting. Like gambling, though, the best approach is to never use more money than you can stand to lose.

]]> By: TFB http://thefinancebuff.com/my-future-is-not-a-game.html#comment-3173 TFB Thu, 07 Jan 2010 18:58:39 +0000 http://thefinancebuff.com/2010/01/my-future-is-not-a-game.html#comment-3173 Jay - This post is not about whether the odds of beating the market is favorable or not. Even if it's favorable, which I don't believe it is, one is better off not playing the game because one's future is not a game. Jay – This post is not about whether the odds of beating the market is favorable or not. Even if it’s favorable, which I don’t believe it is, one is better off not playing the game because one’s future is not a game.

]]> By: Jay http://thefinancebuff.com/my-future-is-not-a-game.html#comment-3170 Jay Thu, 07 Jan 2010 17:05:29 +0000 http://thefinancebuff.com/2010/01/my-future-is-not-a-game.html#comment-3170 Fun, but your conclusion that "People can and do beat the market in any year, as my trading game result shows" is incomplete. People do beat the market, but research demonstrates that this does not happen consistently and with predictability. Your "beating the market" in this instance is meaningless in the context of making broad statements about active investing. If you went to a roulette table, placed all your money on the number 15, and won - would you then conclude that the odds of roulette are in your favor? Fun, but your conclusion that “People can and do beat the market in any year, as my trading game result shows” is incomplete. People do beat the market, but research demonstrates that this does not happen consistently and with predictability.

Your “beating the market” in this instance is meaningless in the context of making broad statements about active investing. If you went to a roulette table, placed all your money on the number 15, and won – would you then conclude that the odds of roulette are in your favor?

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