Why your security makes you poor

14H

@Multibagger I'm with you on that, Chris.
Expectation horizon and risk must go together. I just think it's important to be honest with yourself: 'security' is often just another word for sacrificing returns. But the problem is that most people just don't want to realize that... otherwise I wouldn't have written this post in the first place. If you are fine with less performance for your peace of mind, all good.

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13H

@Eliasmrll But security is exactly what people want for their peace of mind. People know that they are losing out on returns.
But the price for more returns is too high for them. And that's perfectly okay.

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MarTheRadi@marda304

13H

Such posts often appear when the Fear and Greed Index needle points to the right. Eight weeks ago, the hunger for risk felt non-existent. At least there were no posts about it here.

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14H

All returns are useless if the investor cannot tolerate the downside and volatility and then sells again and again in panic. 🤷🏻‍♀️
Mathematics or not, the psyche makes the decisions, not rational mathematics.

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14H

@Metis That's probably spot on

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KingC@RaphGM

12H

An investor in the S&P 500 over the past 15 years experienced five price declines of more than 17% each, the shortest of which lasted more than 80 days. Notably, the longest price decline lasted almost 500 days and reached a magnitude of about 25% (Dec. 2021-Dec. 2023).
The sharpest decline occurred in 2020 (-33%) and it took 120 days for the market to recover.

However, these events pale in comparison to what happened at the beginning of the millennium:
Dotcom bubble (2000-2002): S&P 500 price decline of ~49%, recovery in ~7 years; Global Financial Crisis (2007-2009): S&P 500 price decline of ~57%, recovery in 5.5 years.

I think most investors overestimate their ability to withstand such events.

In hindsight, it's easy to say "I'm fine, the market always bounces back", but when your wealth is at stake, for example when you're close to retirement or even already retired, losing 50% of your wealth can have dramatic consequences, and a recovery period of 7 years can feel like a very long time.

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Kreon@Kreon

14H

This is a very under-complex approach. Anyone who only looks at returns when investing and ignores all other factors such as investment horizon, investment objective, risk appetite, total assets, etc. is not practicing risk management.

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14H

@Kreon People like that won't understand, they are extremely set in their ways 😕

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BeachPlease@BeachPlease

13H

@Kreon His point is that supposedly safe consumables such as Coca-Cola have a poor risk/reward ratio, which means that the risk appetite you mention leads to subterranean performance. By talking about 300% for the S&P, he is suggesting a medium-term investment horizon. The investment objective and total assets have absolutely nothing to do with his attempted explanation.
Did you even read the article?

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10H

@BeachPlease But you can't look at risk separately from overall assets and investment objectives.
Or have you not read @Kreons comment?

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BeachPlease@BeachPlease

@Metis Well, as a pensioner, putting a few hundred thousand into dividend-bearing securities generates a decent return, if that's what you mean. But I don't think that wealthy pensioners are the target group here.

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@BeachPlease Beautifully said

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Kreon@Kreon

@BeachPlease That is not what is meant. But the greater my total assets and possibly the closer I get to financial independence, the smaller the part of my assets that I might want to expose to a high maximum drawdown. Reallocation is also an option, depending on the economic situation. You are mathematically correct in your scenario. But as I said, simply comparing 2 securities/indices over 15 years is under-complex, even if it would be nice if it were that simple. Hardly anyone has just one stock and goes buy & hold forever.

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@Kreon You can actually compare all dividend stocks

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13H

Although I am camp growth or total return, I don't find such a statement really appropriate or helpful. Everyone has a favorite style. Many roads lead to Rome.

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14H

Then you certainly seem to be financially free already, as "clever" as you write here 😂

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14H

@Pacco93 If you get personal, you've already lost the discussion anyway. It doesn't matter to you whether I'm financially free or not, I'm so well off for my age that you'll probably never catch up with me.
Give me a kiss.

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14H

@Eliasmrll Didn't you also get personal in your post by saying that investment strategies other than "pure return" are stupid?

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14H

@Metis Strategy criticism is a factual discussion. Asking about your account balance because you've run out of arguments is personal.

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14H

@Eliasmrll Where did I check your account balance? Everyone has a different definition of financially free and why would I want to catch up with you? It seems to me that you are rather unhappy, the way you react emotionally 😕

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13H

@Eliasmrll But between the lines, your contribution doesn't read as criticism, but as an attack.
Because you leave out everything else that is relevant: psyche, analysis period, investment goals, etc.

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13H

@Pacco93 First asking for status and now evading it? Weak. As if financial freedom were a philosophical state and had nothing to do with account balance or deposit value. Nice backpedaling, Pascal. Good luck to you!

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13H

@Eliasmrll then I'll ask you other questions, maybe you'll have answers. How do you know that I'm not younger than you and that I can still "catch up" with you?

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Solitair@Solitair

13H

It also depends on the stake. It's different whether you go for a high-risk strategy with € 10,000 or € 500,000. Risk protection becomes important and it's no longer about squeezing out the last percent of return.

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Raketentoni@Raketentoni

13H

That's why I'm running a dumbbell strategy without a middle 🙃 on the one hand the ETF and dividend stocks as a safe haven and risk side with stocks that have volatility and I'm doing well with it.

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ThomasHH@ThomasHH

13H

No strategy, no concept beats the stock market.
The question is, what investment approach do I follow?
My "boring" stocks, such as $ALV, have performed excellently in recent years and have also paid out a lot of dividends.... and completely stress-free.
I have also earned well with derivatives. However, the risk of loss was also quite high and the personal time required to deal with the stock market on a daily basis.
Private investors who still have a job, a family and a life in general are ultimately much better off with low-volatility "boring" stocks.
Those who sacrifice their lives solely to maximize profits have none.

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Matzke@Matzke

12H

Your contribution is very good and correct and yet so fundamentally wrong! If that's your way, always ride a very hard stripe - step on the gas! Your risk - your gain or loss. The most important thing, from my humble point of view, is that everyone should find their own way. Everyone should choose the assets they like, everyone should act in their own time frame, everyone should act according to their life situation and according to their psyche and the time they have available. There were days in my life when I lost mountains of money within minutes - then there were other days with a net profit of 178 K in 3 days. I wouldn't want to miss these moments, but I don't need this stress every day either. Once you have a bit of money, then you can, in my view, simply put a few ETFs in your portfolio or a piece of gold in your vault, have a few Arestocrats in your portfolio and live a more stress-free life. After all, life is an endurance run - you can't just sprint. Greetings

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Oktoberfest@Oktoberfest

12H

It used to be "nice that you started" today you haven't done 100% in a day and you're nothing.

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12H

@Oktoberfest We are a forum for shares here, obviously nobody is praised here for starting 🤡

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Oktoberfest@Oktoberfest

12H

@Eliasmrll Yes, times are changing. It used to be different here. That's why I'm hoping for a big sell-off, which will also flush certain people out again.

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Tenbagger2024@Tenbagger2024

10H

@Eliasmrll Yes, take a look at all the small entry-level depots. Something like this is still written there.

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Horsti@Horstiiii

10H

🍿

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Uwe@SchlaubiSchlumpf

I strongly believe that the s&P will not be a 10%+ perpetual rocket. However, I also expect it to outperform the dividend-weighted S&P500 in the long run. After tax at the latest.
In principle, what you say is right.

But US investors are a bit spoiled when it comes to returns.

Nevertheless, there is nothing to be said against taking bonds if you are not confident about 60% drawdowns.

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Smudo@Smudeo

14H

Well. Anyone who bought Coke 15 years ago now has a dividend yield of 7% on their equity
You don't get that much with bonds or fixed-term deposits.

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14H

@Smudeo You should perhaps compare this with $COKE. And see where the return was better after 15 years.

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Smudo@Smudeo

14H

@Tenbagger2024 I only meant the general text @eliasmr there are dividend investors

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14H

@Smudeo In the end, only the total return counts

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Tenbagger2024@Tenbagger2024

13H

@Tenbagger2024 I unfortunately bought too few of these a year ago! This is my n1 in the industry.

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13H

@Aminmeskini never really understand why the share is so rarely mentioned. And why the focus is usually on the licensor

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Tenbagger2024@Tenbagger2024

13H

@Tenbagger2024 All the better for us 😉 the share has outperformed all big tech over the last 5 years except for Nvidia.

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13H

@Aminmeskini yes absolutely, unfortunately it's only on my watch. but it always inspires me

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13H

@Tenbagger2024 approx. 4% of our portfolio and are up approx. 70%. The share is nevertheless very volatile and offers plenty of opportunities to enter the market.

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Paulchen@Divident_e

12H

You will certainly understand at some point. But better late than never

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12H

@Divident_e You have to be a bit more specific? I have a return of 480% in the last 5 years. What are you getting at?

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

12H

@Eliasmrll I have a return of 57393% in one year

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And 2 or 3 years ago, you were still talking about $PG yourself and triggering votes on REITs.😂🤣

Ridiculous... and tschüss👋🏻

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