We digress from the thread topic, but joking aside, I think that's too cynical, unfortunately, and assumes that most academics are driven primarily by publicity. I'm not an academic but I highly doubt that's true. I know academics rely on sufficient funding and publicity may help to bring that, but I'm sure (or at least, I hope!) that more value the respect of their peers through publication in a journal such as Nature than the wider publicity of generating a headline in the Daily Wail.
New Sunday Times Feature - Diary of a Private Investor
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Colm Fagan
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Thanks Brendan.
Berkshire Hathaway common stock has failed to materially outperform the S&P500 for well over a decade at this stage and Warren Buffett routinely advises retail investors to put their money in index funds.
Which raises an interesting question - has it become more difficult for stock pickers to beat or even match market returns?
Have technological advancements reduced arbitrage opportunities for diligent investors that are prepared to research individual stocks (in other words, has the Internet made markets more efficient)?
Has the fact that the overwhelming bulk of money in the stock market is now professionally managed removed the "dumb money" from the market that can be exploited?
I don't pretend to have the answers to these questions but if the greatest stock picker in history can't beat the market anymore, what chance do the rest of us have?
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galway_blow_in
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since 2012 how have european stocks measured up against the u.s market ?
the answer is as follows
the IUSA ( euro denominated etf ) has risen 88.57%
the IEUR etf has risen 26.18 %
slam dunk !
the european market is cheaper for several reasons
its less friendly to corporations than the usa
its a weaker and less dynamic economy by a distance
its always been this way that u.s stocks are more expensive
Colm Fagan
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Martyn
I completely agree that many academics - probably the vast majority - are not driven by publicity. It was a cheap shot. I'm sorry for saying it.
US stocks have clearly outperformed European stocks over the last 8 years.
But you said that European stocks have never outperformed US stocks over any material time period in the past, which is simply untrue.
Again, the past is not prologue.
galway_blow_in
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ok let me put it this way , the u.s market as a rule outperforms the european market most of the time and the european market follows movements in the u.s market more than the u.s market apes the european market
Gordon Gekko
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I’ve seen that argument advanced many times; people talk about the US being “expensive” and Europe being “cheap”, but perhaps that should be the case if the US companies are better and the environment is more favourable?
There is a high degree of correlation between stock markets in all developed markets if that's your point. However, the correlation between different markets has never been perfect.
The US stock market has certainly been one of the best performing markets of the last 100 years (incidentally, it wasn't the best performing national market).
But that's the past - don't confuse outcome with strategy.
Would you have said the same thing about Japan, which was the biggest stock market on the planet at one point back in 1989?
Things change - markets don't follow "rules". If they did, investing would be easy.
galway_blow_in
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all i know for certain is that europe follows the u.s down like clockwork
hence why i believe you might as well for simplicity and diversification just own the s + p
galway_blow_in
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yes and yes and dont take the opinion of an average idiot like me either
there are many industry articles which argue that u.s stocks are naturally more richly valued , whatever political instability trump has brought to america , its a whole lot more together than the eurozone , bar germany , no major large country in europe has seen its stock market move anything worth risking money for in nearly twenty years , i include the uk due to the horrible currency effect back to euros from sterling
the ISFA amsterdam etf which tracks the FTSE is down nearly 4% since this time sixteen years ago
https://finance.google.com/finance?q=AMS:ISFA&ei=B7mdWpiAJ4nsU8vfpbAC
Brendan Burgess
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It doesn't.
Just look at what happened after the dot.com crash or in the immediate wake of the financial crisis. It is simply untrue that there is a perfect correlation between US and European stock markets.
Simply repeating a falsehood over and over again does not make it true.
And that's before you even start to consider the fact that currency risk is uncompensated.
I would have thought the internet and computers made markets more volatile. For example the big sell off a few weeks ago where the dow falls a 1000 points in a couple of hours, where is the efficiency and rigour here when everything gets sold off together. To me that is still plain old panic even if done by computers. There are large sectors of the market for instance emerging markets 2 years that get sold off to such a huge extent and then turn around and experience rapid rise, that is hardly efficient markets in operation because surely other market participants would buy if they thought it was too cheap so it would always be at correct price, this clearly does not happen with emerging markets.
Also with regard to most money in the market being professionally managed, are you sure, I thought most money in market or a large proportion is now exchange traded funds with much less being professionally managed
I don't see any reason why efficient markets should be less volatile than (relatively more) inefficient markets. I would have thought that effective price discovery requires a significant degree of price volatility.
In any event, as it happens, we have just lived through the least volatile period in stock market history -
https://www.askaboutmoney.com/threads/2017-an-extraordinarily-calm-year-for-the-stock-market.206558/
Yes, I'm sure.
ETFs (or index trackers generally - not all ETFs are passively managed) still only represent a fraction of the market.
In any event, ETFs (or funds generally) are professionally managed investment vehicles. I'm drawing a contrast with individual stock pickers (like Colm and Brendan) that represent a vanishingly small portion of the overall market.
And that is the best you can do? Both of the stocks are small caps no matter what index they appear in and the portfolio selection was high risk and failed to deliver the kind of returns one would expect when compared with a less risky blue chips selection over the same period. At this stage best ignored and forgotten.
You are taking this out of context - Buffet advises index investing as opposed to investing in Berkshire as at this stage it can deliver at least as good a return as Berkshire at probably a slightly lower risk. The problem with Berkshire is that it is simply too big and no matter how well the stock picking goes it will have little impact on overall returns.
Not at all, the problem facing such people is size, the bigger the portfolio being managed the bigger the opportunity needed to make a significant impact. That said, much of what passes for stock picking today is more based on lucky hunches and following the crowd rather than a deep knowledge of a couple of sectors and countless hours of analysis.
Sorry Jim but I'm not taking anything out of context. I am fully aware of the rationale that Mr Buffett has offered for his advice.
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Brendan Burgess
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Hi Sarenco
Just to clarify, I am not a stock picker as such. I don't believe that I can pick winners and losers.
I have a portfolio of 10 largish shares held for the long term. Yes, I had to "pick" them at some stage but they were for diversification and maturity e.g. my most recent additions were Siemens and Bayer. I don't read their accounts and have no idea whether they are any better or worse than other companies in their industry other than the fact that they are large and the thousands of Colms around the World have decided what their market price should be.
Brendan