RTM
Invesco S&P 500® Equal Weight Materials ETF
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RTM.V - RT minerals has 40x normal trading volume since Dec. 6th
(TSX: CNR) (NYSE:CNI) Q3 Results Reflect Strong Top-Line Growth and Renewed Focus on Scheduled Operation
$RHT.v/$RQHTF - Reliq Health Technologies Announces Three New Contracts - 1.22/0.92
RTM now at 0,05$ next 1000$! the next GME! To the 🌕! Raptoreum the CPU Cryptocurrency
RTM now at 0,05$ next 1000$! the next GME! To the 🌕!
RTM now at 0,05$ next 1000$! the next GME! To the 🌕!
John Bogle The Little Book of Common Sense Investing and The Bogleheads Guide to Investing Book Summary
I chose GameStop for my Restructuring & Turnaround Management (RTM) course assignment!
I chose GameStop for my Restructuring & Turnaround Management (RTM) course assignment!
Update on my post about Clubhouse, $API (Agora), Social Audio apps, $TWTR and $AMZN
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I'm hyper-focused on what I know— SPX universe, including VIX & VIX options. Most of my knowledge is generally transferrable— vanilla options are vanilla options after all; but each product has its norms.. structural flows, general persistent imbalances, concentrations, etc.- and understanding deeply what these things are and how to take advantage of them creatively is where I think the "alpha" lies, and that's what drives what I'm doing with VolSignals & VS3D. As someone who has himself grown a personal trading account 100x to over $1m and then back to $0, I would honestly say that no matter what level of "alpha" you have (even if you're a VS3D user and RTM subscriber with the greatest alpha available to retail, hint hint ;) you are still going to suffer if you don't just get the basics of trade sizing and risk management right. I used to have such good hit-rates that my conviction was my foil. I realized that no matter what, I'd be all in, because I was addicted to some perverted version of the Martingale where I just doubled down every time I won. (that can only end badly) It took me completely reconfiguring my approach from: "MAKE MONEY" to "DON'T LOSE MONEY" and eventually that made all the difference. Smaller trade sizes- rules around how much of the trading account is tied up in one thesis or trade- rules about take profits and a framework for identifying if I am gambling or taking a trade with "edge" per my view. All of those things are what make the difference. Without those, you will just have a high variance trading account and those tend to wind up at zero since you'll never walk away.
Short Sellers, profit takers, and basic RTM statistics playing out
Was just watching a video of Jack Bogle talking about RTM, which is "Reversion to the Mean". He was saying it's the only sure thing (if I understood correctly). We've averaged 14% with the S&P for the last 15 years. It's average since inception is 10%. At some point it's gonna revert to the mean.
Your are concentrated not because of AI, but have been happy riding the U.S. equities wave. There will be RTM (reversion to mean). Always has been and always will be. Nothing in investing ever changes.
No. What do you think pensions were invested in BEFORE 401k?? They were invested in equities just like now. EVEN MORE SO back in the 70's, 80's access to international equities were WAY MORE expensive and difficult to do. Sounds like you are trying to rationalize U.S. equities being "less risky now". Trust me if you invested in 2008 they were NOT just like the rest of the world. The answer you are trying to find is that we are long overdue for a RTM (reversion to mean). It will certainly happen (like a flat 2000's). No surprise folks had 401k in those 2000's so it didn't matter 401k vs. pension investing.
As I tell everyone all I have ever learned form investing since 2008 is: 1. Markets go up, down, sideways ALL the time. 2. NO ONE knows when any of the above will occur. NO ONE knows why this stuff is going up. NO ONE knows when it will come down. Stocks indexes have ALWAYS shown a RTM (reversion to mean). Nothing suggest otherwise this time. That means what goes up WILL come down. When or slope of its descent... WHO KNOWS. Follow the rules above and you will become a better investor.
We will DEFINETLY be having a 2000-2010 moment. It is all about RTM (reversion to mean). If we didn't the market cap of the U.S. would basically be the WORLD'S market cap. It eventually has to go down or would crowd out the rest of the world put together (never has happened in history).
And what would we consider running aground striking a rock to be? Something substantially worse than 2008 or 2000? Last I looked, the S&P today is [noticeably above the long-run historical trendline.](https://i.imgur.com/lT0K2Qa.png) The next phase of the US business cycle is a contraction/recession, and if we RTM with that trendline, it'll be a ~30% downtown. Wouldn't surprise me in the slightest if we have that in the next few years, regardless of anything with the current administration. It's inevitable. And I'm still perfectly content with my asset allocation given that possibility; nothing to change.
Do some research this statement is just false. Historically when a republican wins there is an initial bull followed by a RTM and when it’s a democrat there’s an initial bear followed by a bull. All in all the market is largely unaffected by our US president.
Yeah, doesn't necessarily mean that revenue will be generated exponentially, though. RTM, will happen, eventually.
RTM.V - RT minerals corps. **Volume has increased in a massive way starting on December 6th. I think they found a decent deposit.** $RTM.V is a nano cap mining company. $800,000 market cap and 22million shares. They have claims in and around Timmins, Ontario and Cochrane, Ontario. Detour lake gold is behind Cochrane. Timmins has massive gold mines and is home to the second largest nickel deposit in the world.(Canada Nickel) I don’t know why the volume has increased or what is going on. Just wanted to bring this to everyone’s attention.
$RTM.V is a nano cap mining company. $800,000 market cap and 22million shares. They have claims in and around Timmins, Ontario and Cochrane, Ontario. Detour lake gold is behind Cochrane. Timmins has massive gold mines and is home to the second largest nickel deposit in the world.(Canada Nickel) I don’t know why the volume has increased or what is going on. Just wanted to bring this to everyone’s attention
Hey man, the East India Trading Company is gonna RTM any day now I’m telling ya
The entire concept of RTM is faulty. Individual companies, industry sectors and sometimes entire country indices go to zero and STAY THERE as time passes. Just as a tiny niche can grow enormously and stay enormours for many investor generarions in a row. Something having underperformed is in no way a guarantee of future outperformance. Something having overperformed is in no way a guarantee of future underperformance.
Can it continue forever? No. The ONLY way is if you think Tech sector can just keep growing and crowding out EVERY other sector. Do you think it will grow eventually to 99% of the economy with that last 1% being all the other sectors together? Of course not. So when tech does show RTM (reversion to mean) it QQQ will fall. RTM ALWAYS happens. When that cycle happens who knows. Sp500 has shows a basic historic norm results based on your numbers (8%). 16% is WILDLY too high and anybody expecting that to continue is crazy and not prepared for a beat down to get back to the historic 8-9% is likely to be in a rude awakening. Now does that happen next year and then a underperformance for 10 years OR still destroy for next 10 years then gets OBLITERATED by 80% on a massive sell off with the whole world falling apart with it in 10 years? Who knows?
If you are single stock investor then I would ONLY sell if you are going to invest in the proceeds in an index fund. If not then let it ride. Single stocks do NOT show a RTM (reversion to mean). Meaning if they go up they can keep going up OR the underperformers can go down and just keep going down and down. They are not index funds which show RTM.
All matters if you are index funds or individual stocks. If you are indexing YES, but if in individual stocks it is just a gamble (you may be right or may be flushing more good money down the toilet). Asset classes have shown RTM (reversion to mean). individual stocks have not. Individual stocks can go up forever or down to bankruptcy.
I would get rid of uranium. It is just pure speculation and worse one that is very political in nature (if repubs. are in house next couple cycles forget about it and if Dems are in don't think you are a shoe in over renewables). If you want to be aggressive I would take the 3x and not do nasdaq and just do upro instead. Nasdaq has DOMINATED last 10+ years I just don't see it happening in the next 10+ years. There is ALWAYS RTM. Just some thoughts. If you want to be aggressive I would stick with leverage broad index leveraged funds.
I'm gonna need tman RTM in MRNA.
If you are talking about in relation to DCA vs. lump sum. No that does NOT apply to single company stocks. RTM (reversion to mean) only applies to indexes. Individual stocks can go down forever and go bankrupt or go up forever and never come down to their original IPO price. All bets are off when it comes to any individual stock.
RTM. Cpu mineable crypto with smart contracts that supports Java and c++ as programming languages
No question or argument about continuing regular contributions into index funds with a passive investing approach, i.e. bogleheads approach. That is what the data supports. That is what responsible/ mature investors have/ continue to do. The reason? Assets classes have always shown RTM (reversion to mean), i.e. what goes down come back up and vice versa. Eventually, stocks will come back to their long term trend to compensate those taking on increased risk over those just in fixed income. It has to otherwise no one would be in stocks and everyone would just buy bonds/ cash (same return with less risk then). Capital lending markets can not work that way. Now, the argument lies thinking the same holds with individual stocks investing. That is NOT true. There is no RTM and the overall returns are just TERRIBLE. Please see the link below. Think it covers last 30+ years of data. 40% of stocks that took a catastrophic loss NEVER got close to recovering even 10% from its lows let alone getting back to previous highs. I assume a larger portion NEVER recovered back to their ATH. Overall, the media return of individual stocks is a TERRIBLE -53%! So, please keep in mind the data does NOT support individual stock investing NOR throwing good money into it chasing it. Now, of course, investing in Apple or Google is much different then penny stock xyz company. So, best case scenario one will likely underperform the index and worst case have their portfolio blow up in their face. The chance of an investor have a concentrated portfolio do BETTER then the index is about zero as the article goes into times where it is useful to have a concentrated portfolio and comes out with a big, fat ZERO. Keep in mind this is from JPM private bank division for their wealth management clients. Their results are NOT good for their own marketing. https://privatebank.jpmorgan.com/content/dam/jpm-wm-aem/global/pb/en/insights/eye-on-the-market/eotm-the-agony-and-the-ecstasy.pdf
Your are talking about RTM (reversion to mean). That only holds true for the index NOT individual stocks. Individual stocks go down and never recover or go down and recover and keep going to new heights. I am starting to think folks on here might not have a clue on the actual data of individual stock investing despite doing it. The link below shows over the last 30+ years the data on ALL the individual stocks during that time frame. Here are some highlights... 1. 2/3 of all stocks had negative returns 2. The median return is >-50% return (yes that is that is NEGATIVE) 3. If a stock has a catastrophic loss there is a 40% chance they NEVER recover again (defined by if they lose 70% from peak they never get back to even -60% down again). [https://privatebank.jpmorgan.com/content/dam/jpm-wm-aem/global/pb/en/insights/eye-on-the-market/eotm-the-agony-and-the-ecstasy.pdf](https://privatebank.jpmorgan.com/content/dam/jpm-wm-aem/global/pb/en/insights/eye-on-the-market/eotm-the-agony-and-the-ecstasy.pdf) Mind you this is a bank (JPM) whose advice to the high end client is there is no simulation of theirs that advocate a better situation holding a concentrated portfolio (just a collection of stocks vs. index), i.e. we can't offer you any advantage with our services of stock picking.
Just to make sure everyone is on the same page RTM (reversion to mean) ONLY applies to stock index funds NOT individual companies. Individual companies can go down and stay down FOREVER or just go bankrupt. If you are a index investor just keep putting money away into your asset allocation. If you are an individual investor who knows what will happen to your stocks. They may do better, do worse, or never recover.
Great question. If you look at Jeremy Seigel "Stocks for the long run" you will find an excellent chart showing over a LONG period of time the returns of U.S. and Ex. U.S. developed is the same return and the same risk. It makes sense as they are all mature markets with stable politics and currencies (most Europe tied to euro now). What we have had last 10-20 years is an explosion in U.S. market cap expasion which is why it looks so lopsided. So, the rational investor would say do you really think U.S. vs. world equity market cap (nearly 60% current) will just keep growing? Do folks really think american markets will be 70, 80, or 90% of ALL the equity market cap of the world? Those who invest global argument would be that it is more then likely that 60% will go down then it will go up forever (which is, of course, is not possible). Eventually you have to have RTM. Vanguard advice for the investor is best. Do 20% to market cap based on your personal comfort level.
You do realize that link supports MY assertion and not yours don't you? The index does recover (SP500 from the link you provided) as I stated. That does NOT support YOUR assertion that: *At any snapshot point in time, the individual stocks that are most likely to gain the most are those that are below their historical averages; and conversely the stocks that are most likely to fall are those that are above their historical averages.* Do you have data to support RTM exists for individual stocks? I've stated it doesn't happen for individual stocks and you stated it does. Just wanted the data where you go that idea it exists for individual stocks?
You do realize that link supports MY assertion and not yours don't you? The index does recover (SP500 from the link you provided) as I stated. That does NOT support YOUR assertion that: *At any snapshot point in time, the individual stocks that are most likely to gain the most are those that are below their historical averages; and conversely the stocks that are most likely to fall are those that are above their historical averages.* Do you have data to support RTM exists for individual stocks? I've stated it doesn't happen for individual stocks and you stated it does. Just wanted the data where you go that idea it exists for individual stocks?
That is true IF you are in index funds. There are plenty of companies that have gone down and NEVER got back to their original highs. The concept of RTM (reversion to mean) is for the index (Sp500 for example) and NOT single company stocks. Single company stocks can go up forever, go down and be bankrupt, trend sideways and then go up (looking at your microsoft which did NOTHING for 15 or so years before taking off post 2000 crash),or never get back to its former glory (many tech companies trading still today after 2000's crash).
What makes you think Reversion to the mean will kick in earlier than the next 10 years? I understand what you mean, I've read common sense of investing book, but then there's Japan with Nikkei 225, they've just yet recovered from that dip 30 years ago, when is their RTM going to kick in? I have a gut feeling US will fall out of grace in my lifetime, but I have no way to prove it or even give arguments, just a gut feeling, so I invest in world. What happens, happens, but I'm not calling the downfall of US or US reverting to the mean of the world.
Okay so this is one of the most misunderstood aspects in investing and causes quite a bit of confusion. So, lets start on the phrase, "Past performance..." Many years ago I wondered what the intention was of the phrase so I did some sleuthing. I went on the SEC website and did some research where it originated. I found the original documentation in early 2000's when it was started. The phrase was required due to the SEC realizing A LOT of active funds were using the performance in mid-late 1990's implying those same great results were highly likely when advertising in the early 2000's. Of course, we know how that turned out as 2000's had a flat DECADE of returns for the sp500! The SEC agreed it was false advertisement to make investors feel they would do well just because they did well in the past. That is how that phrase came about. The problem is it has cause (in my opinion) much confusion. Folks who want to learn about investing think it applies to asset class returns. It doesn't. Asset classes themselves show historical RTM (reversion to mean). That means if large cap stocks have a historical long term returns of 9% or so that means over time it will be around 9%. If recent performance was much higher the future short term returns will be less and vice versa. Individual stocks do not show RTM. They can go up forever or go down or go down and just go bankrupt. Why do index investing vs. single company investing is a completely different (and long) explanation for another day!
My advice is always the same (and boring): Pick an asset allocation that fits your willingness/ ability/ and need to take risk. Then concentrate on making as much $$ as you can to invest as much as you can. Then you just invest $$ each and every month not worrying about what the market is doing. Now if you are in individual stocks this may not pertain since individual stocks do not show any RTM (reversion to mean). Just because they go down doesn't mean they will ever go up. They may just keep going down to bankruptcy. Asset classes though do show RTM and is the reason the above plan works over a lifetime of investing.
That is hinting at the concept of "reversion to mean". Yes asset classes themselves have shown RTM. Meaning, using your example, if after holding stocks for a long enough time period (10 years sounds good enough) and your returns are LESS then its long term average (2% vs. 8% in your example) then you would expect much higher returns over the next 10 year period (for example) to "even" things out so the long term return gets back to its often quoted 8%. The other aspect you are hinting at is the 8% it the MEAN and not the RANGE of returns. If you google it you will find great graphics that show range of returns are wide and narrow as the duration of hold lengthens until it gets closer to the historical mean. Interestingly, the MEAN is the same in every holding period (1, 5, 10, 20 year time periods). It is just the RANGE that starts broad and narrows.
Oh I agree RTM is inevitable. The key word you said is "INEVITABLE". That means it will happen even without these specific external influences (Russian/ Ukkraine war or inflation or ...). If not these it will RTM based on something else. If it was easy to pick out WHAT influences bull and bear markets you would be able to market time. The reason you can't market time is no one knows what will push the next cycle. RTM is a guarantee for asset classes. My point is that the market has seen all these bumps in the road before and will keep chugging along LONG TERM (liken to Jack Bogle's story of Chance the Gardner). Based on the story there will always be spring followed by winter and no matter how bad the winter is will always be followed by spring again. So for the long term investor who cares it doesn't matter just stay invested and keep investing and let the cycles do what they are going to do.
Great point about DCA. Someone will have to look it up, but think if you DCA even as bad as the Great Depression was it cut down getting back to even MUCH earlier then not buying at all (think >50% earlier). What I have learned in investing is one makes pretty good money just sticking and not bailing out when these thins of the market happen, but make A LOT of money when you keep buying WHILE the market is tanking. My advice, do the opposite of your instinct and keep buying. Of course, the above holds better as an passive, index investor as asset classes show Reversion to Mean (RTM) unlike active funds or single company stocks.
2008. Started investing about 1 year before that. That was crazy, but lucky I was so new I didn't realize the significance of downturn. Trust me this one is no different then the others. When the lights get turned out they always turn back on at some point. The key is to only have money invested in stocks that is not needed for 5-10 years so you can just wait it out because NO ONE knows when stocks bounce back. Helps that I'm a passive index investor. Asset classes (like sp500 or total stock market) show RTM (reversion to mean), i.e. they go back to their historical mean returns. Individual stocks is where you have to worry. There is no RTM for them. They can go up forever or go down and never recover.
You are correct the above ONLY works for passive index fund investing and not single company stock investing. The reason is RTM (reversion to mean). Asset classes show reversion to mean. That means over time any under performance away from an asset class's historical return average will at some point be followed by a period of out performance to get the asset class back to its long term mean return average and vice versa. RTM does not hold for single company stocks. They can go up forever and never retrace or they can go down and never come back up. Good point.
I personally think people get too caught up in “I like teams” and “I don’t like zoom” as a product. We are talking investment potential. Teams is tied to Microsoft and MSFT seems like a good investment and part of a great ecosystem…. Zoom is less mature of course, but currently building their ecosystem through integrations, custom applications, support and ticket systems, training platforms, phone systems, etc. Did you know you can integrate zoom behind the scenes into your application so it functions as part of your custom app “in screen” and it will leveraged their communications network? We do this with zoom, teams and webex, GTM, but only Zoom can easily become an integrated part of your custom platform. The experience is night and day and a compatible custom tool could easily cost $500k to $1m to develop plus (dev), plus telecommunications data backbone. These tools are usually RTM custom apps which aren’t scalable to large concurrent Audiences. You need to pay for a telecommunications data backbone to do this effectively. Or you can use Zoom… I hear a lot of similar negatives with about DocuSign as well. Not sure it’s part of AARK but probably… I use a free app on my phone for signing shit personally, but from a corporate perspective of high volume document management, permissions, workflows and integration into corporate apps, legal binding certificates…DocuSign is legit. Regardless of pricing today and your view on the stock, we should view also attempt to view these companies from a corporate buyer perspective and where these companies are investing and planning to derive their future revenue, and the size and potential of those addressable markets.
Tech is not a subasset class that is why I use the category it fits under large cap growth (at least in relation to the large companies most refer to when they talk tech). But if you want to be specific yes I am referring to tech sector blowing up and at some point we will see RTM just like every time in history with other subassets/ sectors that outran the competition for a period of time. There is nothing wrong with that. In the last 30 years tech has already had one bust period following boom (2000-2009 after 1990-99). That is what is to be expected and not a criticism on tech just the investors who somehow think it is some magical sector immune to the same effects that happen to any other sector.
Don't think you are getting my point. There is no RTM for a single company. There is a RTM for the index. The reason of the latter is that all the company returns average out. Some of those companies get back to their previous levels, some grow much faster, some much slower, and some go bankrupt. That is why the INDEX reverts as it is summation on a weighted average. That is why you want to index. It takes out all the nonsystemtic/ uncompensated risk of being in a single company. By throwing them all the companies into one pot you get the average returns of ALL the companies in a weighted average. The reason in the end there is RTM of an index is it boils down to the one risk one gets compensated for in the first place, i.e. market risk (beta). So over time the EXPECTED return of an index of stocks should do better then an index of bonds as you get compensated for taking on beta risk, i.e. ERP (equity risk premium) vs. just taking on term and credit risk.
Yes, but you don't have a crystal ball saying your stock will ever recover either. I have noticed folks on this subreddit think there is a RTM (reversion to mean) for individual stocks. That stocks somehow have to recover and regain new highs. Not sure where that thought process comes from. Think it is group thinking and is incorrect. There is RTM for ASSET CLASSES. So if you are a index investor... yes they will eventually recover to whatever there long term trendline. No such thing with individual stocks. Individual stocks can go up forever or go bankrupt or just move sideways. There is no RTM. Not sure where that thought process is coming from.
If you are in an index fund yes. That is the point of taking advantage of "reweighted". If you are in individual stocks... no. There is no RTM (reversion to mean) on single company Also, the bigger issue for folks thinking that tech (LCG) will continue to outperform the larger market. In fact, this last 10 years is a bit of an aberration as growth usually UNDERperforms value in every equity market through history. Growht often goes through VERY volatile periods of extreme outperformance followed by underperformance. So after 10 years of outperformance is it RTM where it will underperform the general market? Time will tell.
If you are in index funds... yes. There is a RTM (reversion to mean) for asset classes so eventually stock as an ASSET CLASS go up or down to their long term expected return trendline. This is the point of index funds as they strip away the uncompensated risk of single stocks and get the systematic risk, i.e. beta. It is that beta that gives the ERP (equity risk premium) to compensate investors for taking equity risk vs. just putting money in bonds. If you are in single company stocks... no. They can be down and stay down and never recover/ go bankrupt or they can come back and go bonkers and go higher then before. There is no RTM with single company stocks.
Best hedge to a stock downturn is free and takes no special skill and that is... TIME. In the immortal words of Shakespeare, "Time heals all wounds". That goes with stocks (at least those in index funds). Asset classes, thus index funds that track them, show a RTM (reversion to mean) back to their "usual" expected return. So best hedge is to do nothing and just wait. Now individual stocks are a different thing. There is no RTM for individual stocks. A stock can go up forever or go down and never recover.
So rebalancing is based on the concept of RTM (reversion to mean). That means over time the ASSET class (not an individual stock) will go back to its long term expected return (if it is above it will drift back down and if below it will drift back up to historical returns). This does NOT apply to individual stocks. Individual stocks can keep going up forever or crash and never recover. So rebalancing only make sense if you hold asset classes usually as an index fund (to make sure you are being true to the asset class). Rebalancing also is meant to recalibrate your risk/ volatility of your portfolio back to the original plan and not to necessarily generate a higher return via rebalancing (diversification return). If the latter happens great, but the goal is to maintain as steady volatility. For example if you are 50/50 (s/b) and the market takes off and you are now 80/20 the latter carries a MUCH higher volatility then the original 50/50. If all of this is over your head I can simplify it if you have specific questions or its time to start reading.
I would agree with this. I don't think tech is doing bad because of the reality of interest rates, but the fear of rising rates AND tech has been dominate for last 10+ years so eventually a change of guard is due. No subasset class has dominated for more then one decade in a row since 1960's and 100% LCG investors are going to learn that the hard way. If you want the returns of 1990's decade you have to accept the returns of the 2000's. RTM (reversion to mean) exists for asset classes.
High Tide is looking like increasingly good value - leading retailer in Canada, leading RTM for accessories and CBD which is a great route for entry to markets as legalisation continues. Executing a great buy and build strategy at highly compelling valuations that is accretive to shareholder value on day one through multiple arbitrage. Covered them loads on YouTube if anyone wants to get a flavour for them. Long term play though, don’t expect to become a millionaire overnight.
Assets have always shown a RTM (reversion to mean). If they are historically above their historical returns (large caps) or below (small cap) they always go back eventually to their historical norms. Now when does it happen? Who knows but it always happens eventual. If you need any reinforcement just look up "Callan's periodic table of returns". It shows returns of major asset classes per year over last 20+ years. You will quickly see it looks like a quilt with no discernable pattern. Now all above holds true for the ASSET class and not individual stocks. Any stock can do anything for ever (keep going up or bankrupt), but as a collective (asset class) the above is true.
Yes. Asset classes (which is what indexes represent) have shown RTM (reversion to mean). Stocks show no RTM. They can go up forever or down forever.
So, if tech is in every industry (I agree with you there) then why would you buy just tech stocks and not just buy ALL the stocks (TSM)? Metal/ plastic is in every industry, but don't see folks clamoring to be all in industrials using the same logic. When I hear arguments favoring one industry above all else makes me think of Sir John Templeton's "The most expensive four words in the English language are: This time is different.". Reality is that is true most of the time. I would guess we are just in a period of tech dominance just like REITS before it, just like commodities in the 1970's before that. RTM (reversion to mean) is more likely then not. Tech has dominated the last 10 years. I don't think the same dominant asset class has lead in 2 consecutive decades going back to the 1960's. Guess we will have to see what happens going forward if this really is a new age OR just the usual recency bias with the latest hot subasset class.
Below is a link to Jack Bogle's excellent "Tell Tale Chart" lecture given somewhere ?Morningstar (can't remember). This is an excellent analysis of the dance between growth and value that ALWAYS occurred as part of RTM (reversion to mean). http://johncbogle.com/speeches/JCB\_Morningstar\_6-02.pdf
Zoom out on the chart. I mean maybe you're right, but it looks like RTM has already happened.
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Problem with Nasdaq is it is just a sector bet mostly on biotech and tech. So if they did well 1990- 1998 and 2010- current and underperformed during 2000- 2009. Personally, I think you had a better idea when you were total world then you are now. One of my no.1 rules of investing is NEVER overweight any asset class that has been hot the last several years. Think NASDAQ has had the best 1, 3, 5, and 10 year returns so only a matter of time until it starts to underperform. Same can be said about U.S. equities. When will the "change of the guard" happen, who knows? But that is why one diversifies because no one knows when that will occur, but it will occur. All asset classes have shown RTM (reversion to mean) so a period of overperformance has been followed by a period of underperformance and vice versa).
Sure, but there is no data to support a risk premium going for large cap growth in any academic theory. In fact, there is quite a bit of data of better results of constructing a portfolio of improving returns by eliminating LCG. Lussier's excellent book talks about this. There is a A LOT of recency bias going on trying to justify the hot sectors, but most likely just in in late 90's, that trend will go back to the "norm", i.e. RTM (reversion to mean). In investing one gets rewarded for taking on systematic risks so doesn't make sense to overweight a segment that there are not risks to be taken on.
I've known about it for a while but I'm a part of a few mining communities. RTM has been around and has been speculatively mined by CPU miners for a like a year but due to recent price movements its gotten onto everyone's radar. Some people's cpus now make more mining rtm than their gpus make mining.
Tech usually refers to U.S. large cap growth asset class. If you look at asset class returns since 1960's to current no single asset class has led 2 decades in a row. Not once. LCG was great the last decade so if it does it will do something no asset class has done in last 50+ years. The reason is Reversion to Mean. Asset classes (unlike single company stock) has shown RTM to get back to its long term CAGR. If it has been trending above it it will eventually trend back down and vice versa. The whole idea is risk premiums given to market, small, and value. Honestly, there is a better chance of international, EM, or small cap value doing well in the next decade then Large cap growth (tech).
The point is not technology continuing to grow but an asset class never goes up forever. At least it hasn't yet in last 60+ years. Just look at any chart. There are times large cap outperforms and then underperforms small. Same for growth and value. Same for U.S. vs. international. So either you believe this is a new normal (has been said and wrong countless times before) or there will be a rotation. RTM (reversion to mean) has been shown to exist at the asset class level. Just like rubber band. You can only stretch it so far before it eventually snaps back. Then can be pulled again. Rinse and repeat. There is a reason the great Sir John Templeton is famous for sayin, "The 4 most dangerous words in the english language is This Time is Different." BTW LAM is not the holy grail in semiconductors... ASML is so if you want to pile into one I would have chosen that one. The reason I said leave it out is same as microsoft is why hold an individual stock if you are holding the asset class itself (LCG).
If the company is not doing well dividends get cut so you can't just reinvest. Now are chance of major companies going down and never coming up? No. The point is the OP is hinting (not sure if he/she even realizes it) at RTM (reversion to mean). RTM by financial theory does not exist for single company stocks, but for asset classes as a whole. That should seem obvious since a stock can go up and never come back down without a retrace to past values or go down and go bankrupt. Thus proving RTM does not exist for single company stock investing. Now if you/ OP or others are referring to there is a LOW chance of good companies going down and not recovering. Absolutely agreed. RTM though is not guaranteed.
Well if you consider pension funds smart money which they are then no they aren't any better. There are 2 seminal articles peer reviewed and published that, no surprise by Wall Street, are never discussed. The BHB and BSB (10 year follow up) articles showed the top pension funds alpha for security selection and market timing each gave a negative alpha (lost money) vs. just sticking with asset allocation. Mind you that doesn't even include the high costs of paying smart money folks. This is why I find it so comical folks chase "smart money" like it is some fool proof way to make money. It isn't. Now there are few out there who do beat the market, but can folks figure it out BEFORE they do it and on a after tax after fee basis over 25+ years? History would point to... no. More common is folks find the new flavor of the month on Wall Street, start following them, and then join them back to RTM (reversion to mean).
I would combine the VOO and IWF and just do VTI (total stock market). It is great LCG has done so well last 20 years, but RTM is more then likely then continued outperformance for another 20 years. If your going to tilt to small I would add value as well (SCV) to take advantage of size AND value premiums (if you believe in it) vs. just small premium via IWM. I would get rid of all the sector stuff, but if you really want to still get some LCG then allocate a portion to vanguard tech or nasdaq. Is the real estate a REIT? If so, make sure it is tax efficient placement since the dividends are NOT qualified. If it is not a REIT just skip the fund all together. Also, if it is a REIT they have a HIGH correlation to SCV if you add that from above advice. If it was me and trying to guess where you are going with your interests I would go... 30% VTI 30% QQQ or VGT 20% IJS 20% VXUS Simple, low cost, and will get you what you were looking for from your original plan.
I'm currently holding PKB Invesco dynamic construction. RTM equal weigh materials most of the material ETFs are weighted heavily in favor of specialty chemicals and gases I wanted paper products/wood and metals more so I chose this. For commodities I wanted a broad basket that include grains(soy, coffee,corn etc) , cattle oil, and metals not one specific material and decided futures and chose FTGC. Finally I got ITB for Home building because if lot of people need to move fire, droughts, etc companies that can build whole suburbs and finance are going to do great (the government will probably subsidize this some how to). I also have a small position in FIDU. It's just a broad basket industrials ETF with very low expense ratio.
I'm currently holding PKB Invesco dynamic construction. RTM equal weigh materials most of the material ETFs are weighted heavily in favor of specialty chemicals and gases I wanted paper products/wood and metals more so I chose this. For commodities I wanted a broad basket that include grains(soy, coffee,corn etc) , cattle oil, and metals not one specific material and decided futures and chose FTGC. Finally I got ITB for Home building because if lot of people need to move fire, droughts, etc companies that can build whole suburbs and finance are going to do great (the government will probably subsidize this some how to)
Just keep in mind DCA ONLY works based on RTM (Reversion to mean). If something goes down and just keeps going down then DCA is just like Dr. Bernstein in his excellent book, "Intelligent Asset Allocator", would describe as "throwing money down a rat hole.", i.e. catching a falling knife. I respect Cathie Woods, but she is not doing anything any active manager hasn't tried in the past and that is excel at active management AFTER their fund gets notoriety an grows in AUM. I am rooting for her, but this story usually ends with her UNDERperforming the reasonable index over any long period of time. Think only 20% of active managers beat their index even after just 5 years. She, like ANY active manager, has an uphill battle. The point being is there is no near guarantee of RTM with any active fund INCLUDING Cathie Wood's funds. So thinking DCA will work is not a guarantee. It may just be catching a slow beed down (like any active fund). Now that being said I do respect Woods so betting on her is a pretty good play if you are going down the high growth, disruptor pathway. Just realize DCA doesn't apply here.
Why are you even looking at buying individual resources instead of materials ETFs? VAW and RTM have been steady gainers for the past 3 months, yet you don’t want to invest in them even though they perform well when the market struggles? Are you enjoying gambling your money away?
RGI and RTM - equal-weight materials and industrials. Equal-weight is your purse sector play so you CAN set it and forget or for years without worrying about market-cap leaders tanking and dragging it down. Plus better returns anyway
Impossible to really say where we are in the cycle, but RTM is inescapable.
I think your question largely boils down to: is Reversion to the Mean (RTM) real and why does it happen? Yes, RTM is real and it almost always happens with funds/ETFs (with a couple of exceptions, see last paragraph). This is because most funds have a certain strategy or specialty. Some funds focus on small caps, mid caps, blue chip stocks, bonds, currency, emerging markets, high growth, fixed income, etc. A lot of these funds try to diversify based on risk tolerance, but they all follow a defined portfolio composition and use the same strategy every year. Some funds are extremely well diversified, and perform consistently in all types of macro environments. Some funds focus specifically on one thing. In this case, ARK focuses on "disruptive innovation," which almost exclusively means these companies prioritize high revenue growth over profits. Why does RTM happen? Well, plain and simple, certain strategies work better during certain parts of the economic cycle. ARK's focus on high growth happens to coincide with our current environment of extremely low interest rates, which are most beneficial to companies that need to borrow a lot of money to survive and grow. In FA terms, one of the main inputs in Discount cash flow (DCF) analysis is the interest rate (or discount rate). The lower the rate, the more valuable future cash flows become. How much profit Company X makes right now does not matter as much as how much profit Company X will make in 5-10 years. So during this period of the economic cycle, ARK's portfolio outperforms everyone else. However, low interest rates will not last forever. Eventually, we will see interest rates rise, and that will hurt high growth companies the most. During that part of the economic cycle, I guarantee you ARK will not perform as well as they do now. That is why Reversion to the Mean happens -- because passive funds and ETFs have a defined and fixed strategy, they don't adapt to the environment. What is the exception I mentioned above? Actively managed funds that change their investment strategy based on the economic cycle. While this sounds super easy, it is not. And the funds that do this the best are private funds that, for the most part, you do not have access to. Example, Medallion fund: [https://ofdollarsanddata.com/medallion-fund/](https://ofdollarsanddata.com/medallion-fund/)