Note: "The Chern–Simons theory is a 3-dimensional topological quantum field theory of Schwarz type developed by Edward Witten. It was discovered firstly by a mathematical physicist Albert Schwarz. It is named after mathematicians Shiing-Shen Chern and James Harris Simons who introduced the Chern–Simons 3-form. In the Chern–Simons theory, the action is proportional to the integral of the Chern–Simons 3-form."
“The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution” - this is the book I will get one soon and learn from it to beat the market, hopefully.
Of course there are people who beat the market over time. There should be no question about that. There are also people who lie about their investment performance, and most of us know those people, too. And there are many who think they are beating the market but aren’t doing the measurements right.
I don’t worry about which group people discussing their portfolio performance fall in. I’m comfortable with my very low cost index funds in my self-managed account, and no amount of condescending comments about “only” getting “average” returns causes me to doubt my chosen path. I’m pretty comfortable with uncertainty and data distribution patterns, and understand the reason for my choices. And I have enough appreciation for diversity, in the best sense of the word, to understand that the path I chose is not the right path for everyone.
And I’ve got enough to retire comfortably, so it all worked out.
After you read the book, you will realize that Simons did not “consistently beat the market for 30 years.” He did, of course, incredibly well, but it wasn’t consistent.
The book will not help you beat the market. Someone I know who is a successful quant trader says the book is interesting to a point but not helpful.
How is that conceptually different from using mutual funds for that portion of your investments in areas where you are not expert enough to pick your own stocks (or other securities)? In each case, you are paying for someone’s expertise in picking investments (although, in the case of mutual funds, you could also be paying for the ability to diversify to a greater extent than you would be able to on your own, in the case of broad index funds, international funds, and the like).
@ucbalumnus Oh, it is very different. I’m paying for that specific firm and FA’s knowledge targeted to MY feedback and comfort with risk. FA knows that we like tech. FA knows that with international we’re more interested in some areas than others. The firm is small and has a specialist team in multiple fields. So if my FA has a question about a retail stock there is someone who specializes in that. The company is small and that matters. Sure fidelity or any other company has specialists but if there are 1,000s of employees, your FA is not going to be in a meeting with all of them.
We recognized in our30s that the size and approach pf the firm has to match the client. Our previous guy had the right approach but used only mutual funds. Returns were ok. Our stocks did far far better. This firm invests via stocks and it’s a better fit.
We are paying the FA for specific advice for us not generic info fir everyone. That matters. We usually discuss various options as well (often tax related or relayed to hw much income is coming in via the businesses). That can save a bundle!!!
I think there are many ways to get to A golden retirement.
For us, investments are specific stocks and some bonds and other monetary devices. There is no way I could follow all the stocks in our portfolio. Plus the FA follows the market so knows roughly when to sell and buy. No individual investor I know can do that. And we also like the built in expertise. Not to mention, the FA is paid on the entire portfolio so has no interest in one thing over another except good returns.
If you have success with stock picking, I say more power to you. Those of us invested in S&P index fund (or ETF) aren’t as diversified as we might think and the number of stocks (500) implies. FANG (Facebook, Amazon, Netflix and Google) make up 12% of the index.
I have consistently underperformed the market over the past 35 years, largely because I was in cash for years (got scared out at the lows after the 87 crash and believed the pessimists who said we were heading for depression), got back in the market just in time for the 2000 peak. Decided I needed some “tech exposure” so I bought MSFT and INTC, both of which I still own.
Over the years I have developed a knack for buying at the highs, but fortunately since getting shaken out at the lows again in 2001 I have followed buy and hold but an outsized allocation in bonds because I am risk averse.
But just to prove that I retain my ability to buy at the highs I bought gold 2 weeks ago at around $2065 before it promptly pulled back to $1875. I still have it!
@NJres We hold very long term and don’t try to buy at the low. If I like a stock, I’ll watch it for a bit then when I have some $ I’ll buy it. Now that we are older and have a decent FA, I’ll tell him please buy this or that. But only in small amounts relative to what we already own and really only in tech/bio-tech. The rest is his job.
I think that many people get to retirement via one or two major things: a solid pension, a great real estate investment, a couple of strong stocks, a slow and steady rate of savings, a business sale or an inheritance. Very few people catch all of these things but many catch some. It’s all good as the ultimate goal is to have enough money to pay bills and live well as you age.
My dad is an all cash guy. He is totally risk averse. He won’t even buy muni bonds. It’s unlikely he’d buy gold either. I think there are a lot of people who can’t stand to see any losses in their portfolio.
“Many” is probably a minority; it is likely that most retirees will be dependent on others (family or the government (Medicare and Social Security)) to cover their retirement monetary needs.
@ucbalumnus Of course you are right. Sadly, many people are living very frugally or without in retirement. What I should have added is the word solid or a golden retirement where they earn 70% of previous working years.
Then again, you could probably infer that’s what I meant as this thread is mainly folks who are planning how much they think they’ll need. If not, please insert the word solid/successful/golden.
Hi @IxnayBob - I think it’s been awhile, hope all is well.
I’m a buy and hold person, mutual fund kind of person, and I am fairly conservative. That said, the couple of years I compared “my” performance to my husband’s “blended” fund and the funds my FA picked, the funds I managed had the best performance.
We’ve been very lucky for the last 10ish years. I am told the funds I have with the FA are invested such that when the market goes down, these funds won’t go down as much. That did appear true the couple of times I’ve checked, but I have been pretty disappointed in the returns over the last five years. It could be because I indicated I wanted safer investments (a 2 on a point scale).
I also keep way more in cash than I need.
@BmacNJ and @CalCUStanford, I was just going to suggest Jim Simons, whom I have met. There are a couple of other quantitative hedge funds that I know that also appear to do consistently well and no longer manage anyone’s money but their own. But, they try to avoid any kind of public notice.
I helped someone start a quantitative hedge fund and know how hard it is to manage investments. I spend enough time working that I know I can not devote to managing my investments the kind of attention I would want to. I found that I was very good at picking stocks to enter but never had the time to spend evaluating each day whether to get out. So, I have to leave it to others. Plus, my own income has volatility as my firm gets compensated partly in contingent fees. So, I have looked for advisors who will keep me doing sensible things with my money. I figure I take risk in earning the income and am more conservative in investing it.
@IxnaBob: Thanks for letting me know that. Even if he had shared with us his proprietary investment technique in the book, I would have difficulty understanding the concept. Yes, I’m a true believer of “never Invest In something you don’t understand.”
Twenty years ago when in college as a sophomore, I had a chance to read two interesting books:
1. "When Genius Failed: The Rise And Fall Of LTCM," a great coverage of the 1998 crisis caused by the infamous hedge fund.
2. "A Random Walk Down Wall Street", a good investment guide for laypersons.
@BmacNJ and @CalCUStanford, I was just going to suggest Jim Simons, whom I have met. There are a couple of other quantitative hedge funds that I know that also appear to do consistently well and no longer manage anyone’s money but their own. But, they try to avoid any kind of public notice.
Wow, what a meeting experience you have had with him! And I knew a bit about D. E. Shaw.
Seems conceptually like you have a personal fund manager running a mutual fund with one investor (you) and with investment goals that are tailored to your investment goals.
But would a smaller investor be able to find such a personal fund manager at a reasonable cost?
Yeah, I’d think with a 2 for risk, your funds are weighted heavily towards fixed income so not surprising that your 5 year returns on those holdings are lagging.
Yes, things are fine, but I am more involved in Binge Threads than Investing threads.
What @doschicos said is right: it helps to have DW make boatloads of money
I am also conservative, and follow a form of LMP (Liability Matching Portfolio). We are longer cash and fixed income than I would have expected, but there’s no point in pulling the goalie when we’re up by 6 points with 3 minutes left in the game. We are tilting more international than US with existing funds, but nothing drastic. It is difficult to avoid feeling FOMO (Fear of Missing Out), but I manage it.
