My views, + things I wish I learned earlier:
Trading for long term growth / retirement.
I am trying to seek the smallest risk for the maximum gain.
I strictly trade ETF’s for the diversification and simplicity.
( SWDA / VUSA / VFEM / ISF / VMID / VJPN / VEUR / IUHC + REIT’s ( IWDP / IUKP / IPRP ) )
Global and US having the largest segment of my portfolio, the others roughly 2 - 5 % each.
I feel that not enough emphasis in general is placed on looking at your “risk”, the trend is only being worried about your “gain”.
Paul Tudor Jones said it best :
Where you want to be is always in control, never wishing, always trading, and always first and foremost protecting your ass. That’s why most people lose money as individual investors or traders because they’re not focusing on losing money. They need to focus on the money that they have at risk and how much capital is at risk in any single investment they have. If everyone spent 90 percent of their time on that, not 90 percent of the time on pie-in-the-sky ideas on how much money they’re going to make, then they will be incredibly successful investors.
That is why I have gone into ETF’s. I know full well that in aggregate my returns are going to be somewhat lower that individually picked stocks in a short time frame, but over the long term, factoring in the dividend returns and compounding effects I feel that my returns will outpace individual stock pickers.
John C Bogle advocated index funds, and threw caution to the wind toward ETF’s. His reasons are sound in my mind. If you plan on buying and selling ETF’s solely based on speculation, I think it is a fools game to get into. On the other hand if you choose to select well diverse ETF’s that are focused on markets you see growth, low cost fees and large fund sizes, held over the long term I feel is a no brainer to make money. Companies and economies have vested interests to improve and thrive, the long term effect of this capitalistic mindset means growth for the companies and growth in the share prices.
To quote John C Bogle:
“Don’t look for the needle in the haystack. Just buy the haystack!"
Every single money manager, fund manager and investor tries to beat the market index. It has become the generalised standard of measuring performance of a portfolio. If overtime results default back to the mean, or worse underperform, just cut out all the hassle and work and buy the index! For me this approach in my time of life is best.
Lastly, always remember that your money is precisely that … yours … so every choice made should come with sound reasoning and be tailored to your needs. Don’t impulse buy. Always remember, if anyone says they have a proven strategy, or x/y/z approach to making money in the markets, is talking complete rubbish. Even the best can’t win them all.
If you do go ahead with choosing individual stocks, keep this in mind:
The whole market is gambling and odds! Anyone saying otherwise is lying.
You stack the odds in your favor (good market segment, good capital allocation, good risk management, along with good luck and you make money.) You could lose 90% of your trades and still be profitable providing your risk management is spot on and you let your winners run, keeping a sensible trailing stop near enough in place once in profit.
Repeat this, just like the casinos run their businesses and retire on your own island.
Well, that’s the idea anyway
My views are my own, and many may disagree.
But I encourage everyone to read what others have to say and go with what makes sense to you.