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PaperclipPerfector  3d ago (text post)   2176 thread views

Small-Scale Question Sunday for February 9, 2025

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

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I believe the default course of action would be to buy index or mutual funds. I've been eyeing the S&P 500.

More specifically, the default course of action is to implement a glide path, starting with a high proportion of stock funds and a low proportion of bond funds when you're young, and gradually transitioning to a high proportion of bond funds and a low proportion of stock funds when you're old. Vanguard provides Target Retirement 20XX funds that implement glide paths automatically, both in the US and in the UKGBNI. Alternatively, you can just manually allocate your savings between a stock fund and a bond fund.

I agree that's sensible in a vacuum, but I sincerely doubt I'll be growing old and retiring the old-fashioned way. I'm willing to put my money where my mouth is in that regard.

(I really should opt out of the NHS pension, like hell that's going to be relevant in the thirty or so years till I could plausibly retire)

If it's 2030 and AI progress seems stalled at levels not significantly more advanced than it stands today, I could be persuaded otherwise. But for now, I'm more concerned with preparing for a singularity (with a decent risk appetite as I have little to lose) as opposed to saving for retirement.

Pick out some tech stocks you like. Nvidia or ARM or whatever you believe in. Make a thesis.

Index funds are boring, guaranteed mediocrity and it is very possible to beat them. I beat the NASDAQ by 78% over the last two years and probably much more over a longer period (the chart my bank gives me stops in September 2023), mostly thanks to being early on NVIDIA and crypto last cycle. It's not impossible to make those calls and beat index funds. You don't need to read reports, outsmarting the giga-quants at hedge funds isn't about doing more work or being smarter than them, it's just about deducing the right thesis from having the right vibes. The numbers are already priced in, vibes are where the alpha is.

Of course I've made lots of mistakes and lost lots of money in various errors. That is inevitable if you make aggressive moves and control your own money. I encourage against using leverage. I encourage patience. But risks are needed to earn rewards.

You don't need to read reports, outsmarting the giga-quants at hedge funds isn't about doing more work or being smarter than them, it's just about deducing the right thesis from having the right vibes. The numbers are already priced in, vibes are where the alpha is.

Heavily seconded. My best gains have been in stocks from companies whose business I have known and occasionally patronised over a half-decade.

You really, really shouldn't put your money where your mouth is on this one. You are gambling away your future for something which not only probably won't happen soon, but you don't even get any rewards from the gambling! There's no upside for you here, only downside.

I appreciate your concern, but if it helps, I'm willing to explain my stance.

I strongly expect widespread technological upheaval and even widespread unemployment by the turn of the century. If that does not come to pass, and human skilled labor retains its value, then a more standard portfolio that sacrifices returns for stability would be something I would be willing to pivot to. In hindsight, that would represent half a decade of suboptimal investment.

I don't intend to YOLO onto tech stocks, I seek to invest heavily in American index funds, which I am happy to hear is more or less sensible according to the responses. I intend to spend only a few thousands, per year, on more volatile actions like stock picking.

Even if I suddenly realize, oh shit, I need to save for retirement and college for my (future) kids, that realization would take hold in my early 30s. I would only need to liquidate some of my holdings and reinvest them. I'm not advocating for taking short timelines as an excuse to put * all* financial planning out the window, but I think that a 5 year cutoff is reasonable according to my beliefs about the future of technology and its ramifications on industry. Some might want to withdraw into unchecked hedonism, content in hopes that a post-scarcity civilization will bail everyone out, but I acknowledge that as a possibility while not forgetting that hey, it's good to hold onto your money and grow it for now.

Ok, I misunderstood. I thought you were going for full on YOLO hedonism/risky high payout bet as a strategy, but if you're hedging your bets that's fair.

One reason to be part of a pension like the NHS is that it puts you in an alliance with a large constituency who might plausibly have enough political power between them to keep the gravy train going down the road.

If you're going to invest in the stock market, put the money in an index fund as suggested. I've been making around 10% annual returns doing this. You're not going to beat the market making risky bets because you don't have better information than the market. Trying to pick stocks is just gambling.

If you are truly dead set on out-performing index funds, then you need to invest in something that you have more direct control over, like a business you own or a property you manage.

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