MEGAGUIDE: HOW TO INVEST YOUR MONEY BETTER THAN A PROFESSIONAL INVESTING MANAGER (BACKED UP BY RESEARCH DATA)

[Willmogulater]

The methods to get more than 10% are riskier id assume 99% of the time 8% a year is gonna be better, and my issue isnt expecting to be rich in 10 years, its that for those 10 years id be negative

Putting 60k getting back 30k
Thats -30k thats simply how the math works
Ud only become profitable after 20 years and thats barely, by the time ur 50-70 only then would u be “rich” my issue is that at 50-70 i wont care about wealth

Highest iq man put 60k in investment and u get 30k profit so thats loss of 30k
Nice logic

 

[iabsolvejordan]

Im an investments enthusiast who has been learning about investments since 2018. Since then, I have read multiple academic research papers and books about this topic. I went very deep into it. But I dont have any professional certifications on investing, since my college major (computer science) has nothing to do with investments. Still, I consider my knowledge on this topic to be very advanced, as I got my knowledge, mostly, from people who have the highest status certifications in investing.

That's nice to hear, good luck man. Do you plan on making future threads where you go in depth about the resources you read? If so, i'm very invested in seeing them.

About DeltaTrendTrading, I didnt know him, but I just checked his ttk account and he seems like a very intelligent dude. He has a video about how day trading doesnt work, and I agree 100%. But even though he isnt a day trader, he is still a trader, and the data shows us that traders tend to lose a lot of money as well. Even though he might have had good returns in the past, this is not a good indicator of good future performance.

Yes, i too think he's intelligent and that he knows his niche very well. Also a very good marketer and able to persuade his audience. But yeah this whole trading bubble is to be taken very cautiously.

- David Baker, the manager of the 44 Wall Street fund...
- another example is the Lindner Large Cap Fund...
- Bill Miller, the manager of the Legg Mason fund...
- the Tiger Fund was an investing fund...

I will keep these names in mind, thank you for providing examples.

I'm a more pragmatic and careful person, always was and it seems like my intuitive understanding and how I would approach this stuff seems to be roughly right. Never made sense to me to just speculate on stuff. At least long term.

I relate to you heavily, and I had the same doubts as you at first, but like @geenger said, most people just follow the wave, often times not being the most efficient way to invest:

Most people dont follow this strategy because it has never been the most popular one. The popular and well accepted thing to do is to "select good individual stocks to try to outperform the market", and thats why everyone that invests ends up with poor results, because the data we have shows that this does not work.

People keep doing things that clearly dont work. Because 99% of people dont look at research data when trying to invest. They just go by what people say.

50%? That's standard practice?

Standard practice for financially-stable people. It's a percentage to strive for, ideally. But of course as your income grows by time, you should aim to invest even more than 50%, since that would be the logical way when amassing larger amounts of wealth.

 

[Niki9911]

That's nice to hear, good luck man. Do you plan on making future threads where you go in depth about the resources you read? If so, i'm very invested in seeing them.


Yes, i too think he's intelligent and that he knows his niche very well. Also a very good marketer and able to persuade his audience. But yeah this whole trading bubble is to be taken very cautiously.


I will keep these names in mind, thank you for providing examples.


I relate to you heavily, and I had the same doubts as you at first, but like @geenger said, most people just follow the wave, often times not being the most efficient way to invest:




Standard practice for financially-stable people. It's a percentage to strive for, ideally. But of course as your income grows by time, you should aim to invest even more than 50%, since that would be the logical way when amassing larger amounts of wealth.

So realistically just invest as much as you can afford to each month? And over some time you maybe approach 50% and beyond.

Got it

 

[geenger]

ALL PUBLIC DEFICIT GOES INTO STOCK MARKET IT CANT GO ANYWHERE ELSE.
BUYING STOCK MARKET = COLLECTING PUBLIC DEFICIT

Im not even gonna take you seriously tbh, you are obviously trolling

 

[geenger]

Highest iq man put 60k in investment and u get 30k profit so thats loss of 30k
Nice logic

yeah I dont know how that guy can say something like that with a straight face. He gotta be trolling.

 

[geenger]

Do you plan on making future threads where you go in depth about the resources you read?

not really, because I know 99% of people wouldnt care and I would be just wasting my time doing it.

i'm very invested in seeing them.

pm me, i'll tell you about them.

 

[Rigged]

Highest iq man put 60k in investment and u get 30k profit so thats loss of 30k
Nice logic

0 reading comprehension

The original point which i had was having 60k invested (money put in) and 30k (profit)

u invest 60k
-60k (overtime)
+30k
If u take out 30k u weaken ur investment + ud also be negative of money u could use if u just use 60k overtime

If u take out 90k ud profit but u restart ur investment

Well thats what i assumed until he told me its as easy as using a debit card or a bank when taking out

 

[DeadByThirty]

chad uses one of his connections to get a easy job and get paid six figures, then slays white stacies.
incel comes here, makes little money, loses the little he has in divorce court to an overweight ethnic sub5 woman.
fucking brutal.

 

[Judas Froome]

Im not even gonna take you seriously tbh, you are obviously trolling

 

[Judas Froome]

Government Deficit = Private Sector Saving​

 

[rgl666]

Each country's stock market protects you from it's level of inflation in the long term. USA stocks will protect you from the USA inflation, Brazil stocks from Brazil inflation, etc. So yes, a global ETF would protect you from the average inflation rate of all countries it invests in.

yea i kinda figured that. but i cant figure what happens lets say you invest in your country and something like venezuela inflation happens. how can stocks protect from something like that?

For example, in 2018, the global stock market went down by 14%. but in 2019, it went up by 22%. On average, if you invest correctly, your average yearly return will be around 10% on the long run, so outlier years are not really relevant. What matters is the average. Got it?

im aware of that. what i was thinking of but i didnt word it properly:
if you just invest over time (i think DCA is the term) you will statistically win in the end. i think etfs like this are the best and basically only safe way of building your wealth on the long term when you start from scratch

but what if you have a big amount of money (say 1 mil) and you dump it all at once. and hit a bad period, like from 2000 to 2010. you fucked 10 years of your life. its not like im gandalf that can wait indefinitely. i think this is called opportunity cost? maybe etf is not the best strategy in this case?

 

[geenger]

View attachment 3121812

Assuming you are right about investing in the stock market being basically "investing in public deficit" (I dont know what you mean with that tbh but anyways), why would that impact investor's future returns? How would this make investing in the stock market something less profitable? If you bring a point and dont explain the effects it has on the investor's returns, its not a valid argument.

 

[JohnDoe]

Shit thread tbh, don't want to be rich at 60 years old when old, i want to be rich whilst still young.

 

[geenger]

yea i kinda figured that. but i cant figure what happens lets say you invest in your country and something like venezuela inflation happens. how can stocks protect from something like that?

Good question bro. In this case, when the inflation becomes uncontrollably high like in venezuela, the stock prices drop, in a way that their expected returns would rise proportionally to how much the inflation had increased. Thus, protecting you from the country's inflation on the long term. You dont have to worry about extreme situations like these though, as, by investing globally, the inflation that counts for you is the average world inflation, which is never gonna be super high like venezuela's inflation.

m aware of that. what i was thinking of but i didnt word it properly:
if you just invest over time (i think DCA is the term) you will statistically win in the end. i think etfs like this are the best and basically only safe way of building your wealth on the long term when you start from scratch

but what if you have a big amount of money (say 1 mil) and you dump it all at once. and hit a bad period, like from 2000 to 2010. you fucked 10 years of your life. its not like im gandalf that can wait indefinitely. i think this is called opportunity cost? maybe etf is not the best strategy in this case?

The questions you have are similar to the ones I used to have when I was learning how to invest, they are good questions and I see where you are coming from. To answer this one, there are some things I want to cover:

- Yes, DCA is the name of the strategy you're talking about. It stands for Dollar Cost Average and is used when someone has a big amount of money to invest in the stock market. It consists of investing small amounts each month, instead of investing everything at once. It's goal is to avoing investing everything right before a big drop in the stock market, because that would make you lose a lot of money. The name of the other strategy (of investing everything at once) is called "Lump Sum".

- Lump sum is actually a better alternative than DCA. This happens because, while DCA avoids investing everything right before a big drop in stock prices, it also can make you miss a big rise in stock prices, thus making you miss out on significant gains. And, as the stock market has a historically positive return over time, rises in stock prices are more common than drops, so by doing DCA, you have a higher chance of missing out on positive returns, than to avoid big losses.

- It works in the same way if we consider long periods in the stock market. In a long positive period (which happens more often than a long negative period), by doing DCA, you would invest these small amounts of money over time, and, as the stock prices are rising, you would be buying them each time at a higher price, which is obviously not good for you.

- Plus, you need to keep in mind that while you are doing DCA, the money that you are keeping out of the stock market is invested in some other less profitable investment option (as stocks are historically the most profitable one), and this slows down your returns.

- Basically, DCA is probably going to be harmful for your returns and lump sum is a statistically better alternative.

- And yes, ETFs are still the best alternative for you to invest in the stock market, independently of your decision between DCA and lump sum.

 

[geenger]

Shit thread tbh, don't want to be rich at 60 years old when old, i want to be rich whilst still young.

if you invest $500 per month for 10 years, you'll have more than $100,000.00. So if you start at your 20's, you'll have one hundred thousand dollars in your 30's.

 

[gigell]

Hey guys invest in me I’m a child I need money

 

[narcomogs]

For someone getting started with investing, you have truly given me a legitimate way to start. I plan on:

- wage slaving the few thousands I need for general living and quick procedures ( genio etc. )
- investing the large majority of profit from some online hustles into ETFs
- pulling out what I need to build a real estate portfolio and more expensive procedures ( implants )

retire comfortably and raise family with my htb (ironclad prenup marriage)

as a 21 year old guy currently, is this realistic/ am i on the right track?

seriously appreciate you condensing your ACTUAL research into a thread for poorcels like me

 

[goober55]

Shit thread tbh, don't want to be rich at 60 years old when old, i want to be rich whilst still young.

this, every dollar sunk into value investing is a dollar you could instead put into building an ecom business out of thin air

For someone getting started with investing, you have truly given me a legitimate way to start. I plan on:

- wage slaving the few thousands I need for general living and quick procedures ( genio etc. )
- investing the large majority of profit from some online hustles into ETFs
- pulling out what I need to build a real estate portfolio and more expensive procedures ( implants )

retire comfortably and raise family with my htb (ironclad prenup marriage)

as a 21 year old guy currently, is this realistic/ am i on the right track?

seriously appreciate you condensing your ACTUAL research into a thread for poorcels like me

poorfag listen to an actual millionaire, you need to focus on getting a lucrative career before anything else. did you do college? whats your major? if you haven't, go and either join a trade school or get a degree in something that will pay a lot (law and medicine are top tier, you can become a mid-level easily and make a lot of money).

 

[narcomogs]

this, every dollar sunk into value investing is a dollar you could instead put into building an ecom business out of thin air


poorfag listen to an actual millionaire, you need to focus on getting a lucrative career before anything else. did you do college? whats your major? if you haven't, go and either join a trade school or get a degree in something that will pay a lot (law and medicine are top tier, you can become a mid-level easily and make a lot of money).

Can't believe I'm saying this, just know I have made some mistakes but :

- Dropped out of Mechanical Engineering at a UK Russel Group Uni
- Planned to begin training as an Electrician, but now got 2 years left of a Marketing Degree because of shit controlling african culture

So as soon as I graduate I will be going into trades, yes.

 

[goober55]

Can't believe I'm saying this, just know I have made some mistakes but :

- Dropped out of Mechanical Engineering at a UK Russel Group Uni
- Planned to begin training as an Electrician, but now got 2 years left of a Marketing Degree because of shit controlling african culture

So as soon as I graduate I will be going into trades, yes.

are you in debt right now? how are you making money? living with parents i assume?

 

[narcomogs]

are you in debt right now? how are you making money? living with parents i assume?

Living with parents during summer, at an accommodation during term time.

I've got 1 year of debt from the Mech Eng course, although student debt in the UK works almost like a tax on income so repayments are quite low and fixed.

Solely making money from my online hustles at the moment, but have been applying for part-time jobs for once I'm back in uni like a madman.

Also plan on starting security license training ( takes like a month start to finish ) for some less competitive but similarly paid roles

 

[narcomogs]

are you in debt right now? how are you making money? living with parents i assume?

Just realised you joined today, I am a lucky mf to be getting your advice, thank you

 

[goober55]

Living with parents during summer, at an accommodation during term time.

I've got 1 year of debt from the Mech Eng course, although student debt in the UK works almost like a tax on income so repayments are quite low and fixed.

Solely making money from my online hustles at the moment, but have been applying for part-time jobs for once I'm back in uni like a madman.

Also plan on starting security license training ( takes like a month start to finish ) for some less competitive but similarly paid roles

>online hustles
good but don't let them take up too much time if they aren't paying a lot. here's a sleeper tip, tutoring can make you a lot of cash, if you took accounting or anything that people generally find hard, then see what your options are.
>security license
also good but don't get too wrapped up in schooling. My genuine advice is to fixate on one lane of schooling and invest in building a lucrative career path. if its being electrician, make sure before hand that the economy and market favors electricians.

 

[goober55]

>online hustles
good but don't let them take up too much time if they aren't paying a lot. here's a sleeper tip, tutoring can make you a lot of cash, if you took accounting or anything that people generally find hard, then see what your options are.
>security license
also good but don't get too wrapped up in schooling. My genuine advice is to fixate on one lane of schooling and invest in building a lucrative career path. if its being electrician, make sure before hand that the economy and market favors electricians.

also networking will open doors always, even if you are a bum, if you can get an internship you can sidestep a lot of shit especially if you have that marketing degree.

 

[narcomogs]

>online hustles
good but don't let them take up too much time if they aren't paying a lot. here's a sleeper tip, tutoring can make you a lot of cash, if you took accounting or anything that people generally find hard, then see what your options are.
>security license
also good but don't get too wrapped up in schooling. My genuine advice is to fixate on one lane of schooling and invest in building a lucrative career path. if its being electrician, make sure before hand that the economy and market favors electricians.

Online hustles: They are paying about the same as a part-time job with less than half of the time investment ( when I was actually doing the work, fell off hard recently ngl )

Ideally, I wanted to use the marketing degree to give some authority and legitimacy to a marketing agency I want to pivot to after some experience in the marketing department of a good company - there is a real lack of formal education in this sector and I think it will give me a unique edge when trying to onboard brick and mortar companies, as well as in general. Being on social media with an actual education background seems to be mogging hard in every industry rn.

Security License: This is mainly a short term solution to making my wage slaving era a bit more bearable jfl.

I am not fully convinced I will need to start a trade if I can make the most out of this degree with a good internship, connections and career mobility + my agency plans on the side. It's mainly on my mind just to keep options open if nothing else goes to plan.

 

[goober55]

Online hustles: They are paying about the same as a part-time job with less than half of the time investment ( when I was actually doing the work, fell off hard recently ngl )

Ideally, I wanted to use the marketing degree to give some authority and legitimacy to a marketing agency I want to pivot to after some experience in the marketing department of a good company - there is a real lack of formal education in this sector and I think it will give me a unique edge when trying to onboard brick and mortar companies, as well as in general. Being on social media with an actual education background seems to be mogging hard in every industry rn.

Security License: This is mainly a short term solution to making my wage slaving era a bit more bearable jfl.

I am not fully convinced I will need to start a trade if I can make the most out of this degree with a good internship, connections and career mobility + my agency plans on the side. It's mainly on my mind just to keep options open if nothing else goes to plan.

>am not fully convinced I will need to start a trade if I can make the most out of this degree with a good internship, connections and career mobility + my agency plans on the side. It's mainly on my mind just to keep options open if nothing else goes to plan.

good thinking but if this is your mindset you will need to grind ofc

>Ideally, I wanted to use the marketing degree to give some authority and legitimacy to a marketing agency

also good but you need to start thinking about what can generate capital the quickest, industry connections can really help you because you can go directly to clients or people you network with and offer them your specialized service. read Zero to One by Peter Thiel and it will help you understand how to move in this saturated market.

 

[narcomogs]

>am not fully convinced I will need to start a trade if I can make the most out of this degree with a good internship, connections and career mobility + my agency plans on the side. It's mainly on my mind just to keep options open if nothing else goes to plan.

good thinking but if this is your mindset you will need to grind ofc

>Ideally, I wanted to use the marketing degree to give some authority and legitimacy to a marketing agency

also good but you need to start thinking about what can generate capital the quickest, industry connections can really help you because you can go directly to clients or people you network with and offer them your specialized service. read Zero to One by Peter Thiel and it will help you understand how to move in this saturated market.

This can really be the way. Squeezing the juice out of real industry knowledge and building connections... Could build some serious capital. Lifefuel that was desparately needed, thanks again!

 

[Roge]

Homie if you invest 500 per month (which is very little, if you have a decent career you can invest way more than this), every month, for 10 years, you'll have more than 100,000.00. Literally one hundred thousand dollars, just by investing 500 per month. So if you start at your 20's, you'll have 100,000.00 dollars in your 30's. I dont know how can you look at this and say "nah i dont want it".

And if you spend 10 years in acquiring knowledge and getting job or learning business you can earn 100,000.00 every month. You are not saving to live good dummy, try something else

 

[mathis]

Welcome to my megaguide on how to invest your money in the best way possible.

I’ll teach you the objectively best way to invest your money, and I’ll show PROOF that this way of investing gives you better results than the ones PROFESSIONAL INVESTING FUND MANAGERS get.

This is NOT clickbait, because there is academic research that proves that this strategy outperforms professional investors, and I will include these academic papers in this thread so that you have access to them

After learning everything that is in this thread you will be ready to be ahead of 99,9% of people when it comes to investing your money.

I hope yall enjoy this guide. Lets go.

WHERE TO INVEST?

Before talking about how to invest, we need to figure out what we should invest in. Stocks? Crypto? Dollar? Bonds? Well, the answer to this is quite simple. Take a look at the graphic below:

As we can see, when compared to other asset classes, stocks have (since 1802) outperformed basically everything consistently, by a very large margin. This would be enough for me to show you how they are obviously better and more profitable than Dollar, Gold, Bills and Bonds.

But, if you pay attention to the graphic, you’ll see that crypto is not included there. So what about crypto then? Is it better than stocks?

The answer, based on the current research, is that it is not. because of the simple fact that their expected returns are unknown. This is the general consensus in the academic investing space, as researchers couldn't figure out a way to reliably predict their returns. That means that crypto is completely unpredictable and highly speculative. Don't be a fool, yall. If the most capable people couldn’t do it, you are not gonna be the next genius to reliably predict the expected returns of investing in crypto, so it's not a reliable investing option.

Plus, the most reasonable possibility, according to the past performance of crypto in general, is that they behave in a similar way to a type of stocks called "small cap growth stocks", and these stocks are not the ones you should focus on if you want to invest in the most optimal way.

If you wanna go more in depth about why crypto is not a good investing option, check the following video linked below, from 34:37 to 51:36. This is an interview with Ben Felix, who has the CFA certification (literally the highest status investment certification in the world), and he goes deeper on why crypto is not worth it.

Ben Felix Talks Investing in Crypto, Revolutionary Tech, and Academic Research

The conclusion is: Stocks are the best investing option in the world, and in the following paragraphs, I will teach you how to invest in them in the best way possible for you to moneymax.

HOW TO INVEST IN STOCKS?

We can, initially, separate the stock market investing strategies into two groups (spoiler: one of them is completely bullshit):

Long term investing and short term investing

Long term investing works by investing in stocks basically with the goal of building your “money empire” during your lifetime.
Short term investing, as known as trading, works by buying and selling stocks in the short term, sometimes even in the same day (as known as day trading), with the goal of selling the stock by a higher price than the one you paid when you bought it.

Short term investing is 100% bullshit. This happens because EVERY. SINGLE. PIECE. OF. DATA. that we have leads to the same conclusions: it doesnt work. Here are some of the studies that prove what I am saying:

https://faculty.haas.berkeley.edu/odean/papers current versions/individual_investor_performance_final.pdf (this study found out that active traders underperformed the market average by 10.3 percent annually).

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2535636 (to summarize the findings of this study, take a look at this direct quote taken from it: “day trading is an industry that consistently and reliably loses money. From an industrial organization perspective, it is difficult to understand how such an industry survives. For people to knowingly day trade, most must either be overconfident about their prospects of success or derive non-financial utility from the activity and knowingly suffer losses as a result.”)

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3423101 (this study found out that literally 99% of the day traders LOSE money. It's not even like they have positive but below average results. They literally lose money. 99% of them, statistically).

Clearly short term investing is not the best alternative for you. You should invest for the long term. And if you want to learn how to do it in the best way possible, pay attention to the following paragraphs, because I'm gonna teach you how to actually do it.

First of all, you need to understand what would be an average, a good and a bad stock for you to invest. Take a look at the following graphic:

This is very important for you to understand how to invest in stocks. This is the risk-return graphic, and it is very simple: the higher the risk of a certain stock, the higher the expected returns of that stock tend to be (consider “returns” as the extra money you make from investing in that stock). There is a complex reason behind why that happens, but there is no need for me to go in depth about why this happens. What you need to know is that it is true, this is basic level investing knowledge and there is literally no one in the whole investing industry that disagrees with that. The higher the risk, the higher the return.

Now, take a look at the illustration I made in the graphic (I added a red dot and a blue dot. Consider each of them as a different stock):

Which of these two stocks would you consider the better stock for you to invest in? If you said “the blue one” because it offers higher returns, you are wrong, because even though it offers higher returns, it also has a higher level of risk associated with it, and it's not necessarily better than the red one that has lower levels of risk and lower levels of return. Conservative investors that dont wanna be too risky might choose the red one. Investors that are willing to take some more risk for higher expected returns might choose the blue one. But, objectively, there is no “better” one between these two stocks, because they have the SAME RISK/RETURN RATIO.

Now, take a look at this other example:

Now, in THIS case, the blue stock is objectively better than the red one, as it offers the same levels of return, with a lower risk. This means it has a better risk/return ratio and is an objectively better stock, because by investing in this stock you would generate ALPHA. Alpha, in the stock market, is what we call a better than average risk/return ratio. These would be the stocks that really bring abnormally good results for you as an investor.

This is the type of stocks that professional fund managers (basically the most qualified people in the world to select stocks to invest in) try to find, and they do that by searching for UNDERPRICED stocks (stocks that have a price that is too low compared to the price they should have), as, in theory, an underpriced stock would have a better risk/return ratio. And there are a lot of techniques they use to find these underpriced stocks. These techniques are called valuation techniques.

There is one problem though… The data shows us that… They can't do it.

Think about it: Fund managers, when looking for underpriced stocks, tend to invest in stocks that have a lower price (obviously), and stocks with lower price (as known as value stocks) are usually associated with higher levels of risk (you are going to understand why that happens later in this thread). So, if they were being successful in finding the underpriced stocks (and generating alpha), their returns should be exceptionally higher than the stock market average, right? Well… That does not happen, and i’ll show you a study that proves that:

The study in question is called “SPIVA”, and it is directed by Standard & Poor’s (S&P) which is the same company responsible for creating the american stock market’s index. They analyzed the performance of actively managed investing funds in stock markets all over the world for more than 15 years, and the findings are surprising:

They found that, after 15 years, nearly 90% of the investing funds UNDERPERFORMED the market (had a lower than average return). Here is the part of the study that comes to this conclusion:

This is the US part of the study. But they also analyzed latin america, europe, asia, africa and australia, and the results are similar for every region of the world. Fund managers are the most intellectually capable professionals to try to do it, yet they still can't outperform the market average. here is the link to this research: https://www.spglobal.com/spdji/en/research-insights/spiva/

And what do these results mean? They mean that it's not possible to find “underpriced” stocks, because if it was possible, investing fund managers would be able to find them and outperform the stock market. But they can't. Which means that you cannot generate alpha (having higher returns with lower levels of risk) in the stock market.

This happens because of the Efficient Market Hypothesis (EMH), a investing hypothesis created by Eugene Fama (this guy won a Nobel Prize in economic sciences and is among the greatest investing geniuses to ever live by the way). I am not gonna explain everything about this hypothesis as y'all don't necessarily need to know everything about it, and also this thread would get too complex if I included that here, but I can make a thread about that in the future if yall want.

“Ok, 90% of professional investing fund managers couldnt outperform the market average… But what about the 10% of these professionals that could outperform the market?” The following study analyzed these fund performances, and concluded that they did not generate alpha, and that they outperformed the market because of pure luck. This is a very reasonable conclusion, since the evidence shows us that the vast majority of professionals that outperformed the market during a 10 year period tend to underperform it in the 10 years following this "lucky" period they have. If it was because they are skilled managers, they would be able to keep doing it consistently for various decades. But thats not the case. This study is linked down below:

On Persistence in Mutual Fund Performance on JSTOR

Mark M. Carhart, On Persistence in Mutual Fund Performance, The Journal of Finance, Vol. 52, No. 1 (Mar., 1997), pp. 57-82

www.jstor.org

Even WARREN BUFFETT, which is widely known as the GREATEST INVESTOR OF ALL TIME, cannot significantly outperform the market average in today’s age. Look at this graphic comparing his company’s (Berkshire Hathaway) performance to the american market’s average (S&P500):

He used to outperform the market by a large margin from 1970 - 1998, thats why he is regarded as the greatest. But his performance, since 1999, has been very similar to the average.

So you might be thinking: “Well… If not even the best professional investors in the world can beat the stock market average, then what should I do?”, right? Well, fortunately, there is a pretty simple solution to that, and it's called “Passive investing"

PASSIVE INVESTING

Passive investing basically consists of investing in ETF's.

ETF stands for “Exchange-traded fund”, and its basically a fund that is negotiated in the stock market, and that, generally, invests in the same stocks that make the market index (index = a group of stocks that represent the whole stock market), thus copying the stock market’s performance. It's a passive investing fund, as it doesnt have a manager trying to "FiNd UnDeRpRiCeD sToCkS". It literally just copies the index. And do you remember how 90% of professional fund managers can’t beat the market index? That means by investing in one of these "ETFs", your performance would be better than 90% of investing managers, and even Warren Buffett, the greatest investor of all time, wouldn't be able to outperform you by a significant margin. Sounds good, doesn't it?

For investing in these ETFs, I recommend opening a brokerage account on an american broker, so that you have access to the american stock market. I am not gonna teach you how to do it because you can easily find that type of information on the internet. It's a simple process and will take you like 20 minutes. You should do it because the American stock market has way more ETF options than any other country’s stock market.

In the american stock market, you will have access to global ETFs (ETFs that copy the global stock market index), and this is great, because globally diversifying your investing portfolio is a very rational decision. Take Japan's stock market index, “Nikkei 225”, as an example: it has literally been “walking sideways” and stuck in the same position for like 30 years. How can you guarantee this won't happen to your country? You can't. But if you invest globally, this won't be a problem, because, when combining all the countries, the global stock market has never had a larger losing period than 6 years. In the long run, it's always positive. ALWAYS.

I will save you some time: The most widely known ETF that copies the global index is called “VT”. Just search up “VT ETF” and you will be able to find all the information about it. It is owned by Vanguard which is among the biggest, most popular and most reliable investing management companies in the world. By investing in it, you will, as proven before, outperform 90% of investing managers. Here is a screenshot I took from VT's performance since 2008 (dont mind the shitty quality of my screenshot, I dont know why its that bad) (also the text on the screenshot is in portuguese because I live in Brazil, just saying that so yall dont get confused lol). You can also find this graphic by just searching up "VT ETF" on google.

View attachment 3087817

See how the price of the ETF literally more than doubled since then. That means that if someone invested 1 million dollars in it in 2008, and never invested more money there, they would have more than 2 million dollars nowadays. And I'll remind you again: The studies I showed you proved that this performance is better than 90% of professional investors. Thats how good it is. And you get it by simply investing in this ETF, without having to analyze "which stock is better than the other" and all that stuff.

But you need to remember how investing works: its not something that makes you rich overnight. Remember: SHORT TERM INVESTING IS BULLSHIT, and I already proved that to you before as well. If you are going to invest in this, you should, each month, separate some money from your salary to put on this ETF. And you should KEEP YOUR MONEY THERE. Do not be selling your ETF shares because “X person said this” or “Y person said that”. Just remember how everyone sold their stocks during the covid pandemic, and how they lost a lot of money doing that.

Its very common for people to see the price of their stocks/ETFs go down during a crisis, become desperate, and sell their shares because they are “scared to lose more money”. But by doing this they are actually missing out on the post-crisis gains. In every single crisis of the history of the world, the stock market dropped, but rapidly came back after that. Look at the world’s stock market index and see how it always comes back up after going down because of a global crisis.

(unfortunately this graphic only goes until 2019 and I couldnt find a graphic that highlights the financial crisis timeline that went past 2019. If you would like to see how this graphic goes after 2019, you can search up on google "MSCI World Index graphic" and go to "images").

So, dont be desperate. Do not sell your ETF shares. Keep holding them and buying more month by month. Each year you will have more money invested, until your expected yearly returns of 7% - 10% represent an amount of money that is large enough for you to live off it, and retire from your actual job. How much time this will take depends on how much money you make per month from your job. Investing, when done right, is a way to make you be able to retire earlier, and a way to build your financial empire during your whole lifetime. That's how every legendary investor got rich, and if anyone says something like “Invest in this magic investment for 1 year and you will suddenly become rich”, please dont listen to them, because they are 100% scamming you.

So… As I said, VT is a great ETF option for you to copy the global market index. And, referring to the money you separated to invest in the stock market, if you want to invest everything in VT, that's completely valid, because this is not a “super risky” way to invest, as you will be diversifying your money globally (also, VT has more than 9000 stocks in it, so you are not “putting all of your eggs in one basket”). Plus, remember that by investing in it your performance will be better than 90% of professional fund managers. I am being a bit repetitive on that because its for you to see how great of an investment option it is.

So, if you were to stop reading the thread right now and invested in VT, this would be a great approach to your investments.

But, if you want to get more advanced and boost your returns even more, be welcome to learn how to be a FACTOR INVESTOR. I will teach you how to do it in the next paragraphs so pay close attention.


FACTOR INVESTING

Factor investing consists on investing on stocks that have exposure to some certain "risk factors"

As we saw by the studies mentioned in this thread, it's not possible to generate alpha (higher levels of return with low levels of risk). If you want to have a higher performance, you need to take more risks. So, you might be asking yourself: “Does that mean that if we PURPOSEFULLY invest in riskier stocks, we will outperform the stock market index, as the levels of expected returns are always proportionate to the levels of risk that a stock has?”, and the answer to that is: Yes, there is a way to do this. Ladies and gentleman, I present to you the art of FACTOR INVESTING.

Do you remember when I mentioned Eugene Fama? That guy that won the Economic Sciences Nobel Prize? Well, he also dedicated a part of his career as a researcher to find out which types of stocks were riskier than others. And, to find that out, he, along with his research partner Kenneth French, developed several models. (The most famous ones were the "CAPM", the "three factor model" and the "five factor model"). These models were an attempt to try to determine which factors make a stock riskier than the others. And, with the evolution of these models, they have been able to find out several risk factors that make stocks riskier and, consequently, more profitable for the investor in the long term.

The two main factors you need to focus on are: Size and Value.

The size factor works in a way that stocks of smaller companies (in terms of market cap) tend to be riskier than stocks of big cap companies.

The value factor works in a way that value stocks (stocks with a lower price) tend to have higher levels of risk associated with them, when compared to stocks with a higher price.

(There are also other factors such as "profitability", "investment level of the company", "momentum" and "market beta", but these are all either not 100% well accepted by the current researchers we have, or not accessible in the investment options available to average investors).

So, how could we factor invest using the size and value risk factors? The good news is that there are specialized factor investing ETFs that copy indexes that are composed of value stocks and small cap stocks, thus tending to outperform the overall market index, and boost your returns even more. The bad news is that the factor investing industry is relatively new. So far, we only have high quality factor investing ETFs that target the US market, not the global market. But there is still a way for us to take advantage of this, as the US represents roughly 55% of the global stock market. So we can invest 55% of our money in a factor investing ETF that targets the US, and 45% of our money in a total market ETF that targets the rest of the world, excluding the US (yes, there are ETFs that do this).

The US factor investing ETF is called “IJS”. it targets small cap value stocks (stocks of small companies and that have a low stock price, basically investing accordingly to the value and size factors). And The global Ex-US (excluding US) ETF is called “VXUS”

So, here is a quick summary of the routes you can follow:

- If you want to just generically invest on the global stock market, you can put 100% of your money in VT.
- If you want to use factor investing to boost your returns, my suggestion is for you to invest 55% in IJS and 45% in VXUS.
Both of these options are completely valid. I, personally, am a factor investor, but I also know very intelligent people who know a lot about investments that only invest in VT as they prefer a more simplistic approach to investing, which is completely fine as well.

All of these ETFs are available in the American stock market

So, basically I gave you, for free, all the information you need to know to invest better than a professional investing fund manager. Plus I literally gave you the names of the things you should invest in. Most paid investing courses are very expensive and the methods that most of them teach don't come close to this strategy, as this is objectively the best way to invest your money in the stock market according to the data that we currently have.

You are welcome

And, if you want to learn more about investments, I suggest visiting Ben Felix’s youtube channel. As I said before, he is a CFA, which means he has the highest status investing certification in the world, and he is the one who introduced me to this investing strategy. For the most complete education possible, I suggest scrolling down to his first video and, starting from there, watching all of his videos on chronological order. Here is the link to his channel: www.youtube.com/@BenFelixCSI

If yall have any doubts, just send them here in this thread and I’ll try to answer everyone.

(BOTB Worthy?)

Some guys asked me to tag them in this thread so here ya go: @PseudoMaxxer @user123456 @ShawarmaFilth @Tylermax @oppastoppathe2nd​

Just invest in alphabet Its not that hard
Good guide though mirin for the effort

 

[$Abomination]

Oh boy another stocks dude. Crypto is the same as stocks except it's on the internet. Stocks are dead.

 

[AverageTevvezFan]

Thank you for the high effort thread, very useful

 

[italianmaxxer]

Welcome to my megaguide on how to invest your money in the best way possible.

I’ll teach you the objectively best way to invest your money, and I’ll show PROOF that this way of investing gives you better results than the ones PROFESSIONAL INVESTING FUND MANAGERS get.

This is NOT clickbait, because there is academic research that proves that this strategy outperforms professional investors, and I will include these academic papers in this thread so that you have access to them

After learning everything that is in this thread you will be ready to be ahead of 99,9% of people when it comes to investing your money.

I hope yall enjoy this guide. Lets go.

WHERE TO INVEST?

Before talking about how to invest, we need to figure out what we should invest in. Stocks? Crypto? Dollar? Bonds? Well, the answer to this is quite simple. Take a look at the graphic below:

As we can see, when compared to other asset classes, stocks have (since 1802) outperformed basically everything consistently, by a very large margin. This would be enough for me to show you how they are obviously better and more profitable than Dollar, Gold, Bills and Bonds.

But, if you pay attention to the graphic, you’ll see that crypto is not included there. So what about crypto then? Is it better than stocks?

The answer, based on the current research, is that it is not. because of the simple fact that their expected returns are unknown. This is the general consensus in the academic investing space, as researchers couldn't figure out a way to reliably predict their returns. That means that crypto is completely unpredictable and highly speculative. Don't be a fool, yall. If the most capable people couldn’t do it, you are not gonna be the next genius to reliably predict the expected returns of investing in crypto, so it's not a reliable investing option.

Plus, the most reasonable possibility, according to the past performance of crypto in general, is that they behave in a similar way to a type of stocks called "small cap growth stocks", and these stocks are not the ones you should focus on if you want to invest in the most optimal way.

If you wanna go more in depth about why crypto is not a good investing option, check the following video linked below, from 34:37 to 51:36. This is an interview with Ben Felix, who has the CFA certification (literally the highest status investment certification in the world), and he goes deeper on why crypto is not worth it.

Ben Felix Talks Investing in Crypto, Revolutionary Tech, and Academic Research

The conclusion is: Stocks are the best investing option in the world, and in the following paragraphs, I will teach you how to invest in them in the best way possible for you to moneymax.

HOW TO INVEST IN STOCKS?

We can, initially, separate the stock market investing strategies into two groups (spoiler: one of them is completely bullshit):

Long term investing and short term investing

Long term investing works by investing in stocks basically with the goal of building your “money empire” during your lifetime.
Short term investing, as known as trading, works by buying and selling stocks in the short term, sometimes even in the same day (as known as day trading), with the goal of selling the stock by a higher price than the one you paid when you bought it.

Short term investing is 100% bullshit. This happens because EVERY. SINGLE. PIECE. OF. DATA. that we have leads to the same conclusions: it doesnt work. Here are some of the studies that prove what I am saying:

https://faculty.haas.berkeley.edu/odean/papers current versions/individual_investor_performance_final.pdf (this study found out that active traders underperformed the market average by 10.3 percent annually).

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2535636 (to summarize the findings of this study, take a look at this direct quote taken from it: “day trading is an industry that consistently and reliably loses money. From an industrial organization perspective, it is difficult to understand how such an industry survives. For people to knowingly day trade, most must either be overconfident about their prospects of success or derive non-financial utility from the activity and knowingly suffer losses as a result.”)

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3423101 (this study found out that literally 99% of the day traders LOSE money. It's not even like they have positive but below average results. They literally lose money. 99% of them, statistically).

Clearly short term investing is not the best alternative for you. You should invest for the long term. And if you want to learn how to do it in the best way possible, pay attention to the following paragraphs, because I'm gonna teach you how to actually do it.

First of all, you need to understand what would be an average, a good and a bad stock for you to invest. Take a look at the following graphic:

This is very important for you to understand how to invest in stocks. This is the risk-return graphic, and it is very simple: the higher the risk of a certain stock, the higher the expected returns of that stock tend to be (consider “returns” as the extra money you make from investing in that stock). There is a complex reason behind why that happens, but there is no need for me to go in depth about why this happens. What you need to know is that it is true, this is basic level investing knowledge and there is literally no one in the whole investing industry that disagrees with that. The higher the risk, the higher the return.

Now, take a look at the illustration I made in the graphic (I added a red dot and a blue dot. Consider each of them as a different stock):

Which of these two stocks would you consider the better stock for you to invest in? If you said “the blue one” because it offers higher returns, you are wrong, because even though it offers higher returns, it also has a higher level of risk associated with it, and it's not necessarily better than the red one that has lower levels of risk and lower levels of return. Conservative investors that dont wanna be too risky might choose the red one. Investors that are willing to take some more risk for higher expected returns might choose the blue one. But, objectively, there is no “better” one between these two stocks, because they have the SAME RISK/RETURN RATIO.

Now, take a look at this other example:

Now, in THIS case, the blue stock is objectively better than the red one, as it offers the same levels of return, with a lower risk. This means it has a better risk/return ratio and is an objectively better stock, because by investing in this stock you would generate ALPHA. Alpha, in the stock market, is what we call a better than average risk/return ratio. These would be the stocks that really bring abnormally good results for you as an investor.

This is the type of stocks that professional fund managers (basically the most qualified people in the world to select stocks to invest in) try to find, and they do that by searching for UNDERPRICED stocks (stocks that have a price that is too low compared to the price they should have), as, in theory, an underpriced stock would have a better risk/return ratio. And there are a lot of techniques they use to find these underpriced stocks. These techniques are called valuation techniques.

There is one problem though… The data shows us that… They can't do it.

Think about it: Fund managers, when looking for underpriced stocks, tend to invest in stocks that have a lower price (obviously), and stocks with lower price (as known as value stocks) are usually associated with higher levels of risk (you are going to understand why that happens later in this thread). So, if they were being successful in finding the underpriced stocks (and generating alpha), their returns should be exceptionally higher than the stock market average, right? Well… That does not happen, and i’ll show you a study that proves that:

The study in question is called “SPIVA”, and it is directed by Standard & Poor’s (S&P) which is the same company responsible for creating the american stock market’s index. They analyzed the performance of actively managed investing funds in stock markets all over the world for more than 15 years, and the findings are surprising:

They found that, after 15 years, nearly 90% of the investing funds UNDERPERFORMED the market (had a lower than average return). Here is the part of the study that comes to this conclusion:

This is the US part of the study. But they also analyzed latin america, europe, asia, africa and australia, and the results are similar for every region of the world. Fund managers are the most intellectually capable professionals to try to do it, yet they still can't outperform the market average. here is the link to this research: https://www.spglobal.com/spdji/en/research-insights/spiva/

And what do these results mean? They mean that it's not possible to find “underpriced” stocks, because if it was possible, investing fund managers would be able to find them and outperform the stock market. But they can't. Which means that you cannot generate alpha (having higher returns with lower levels of risk) in the stock market.

This happens because of the Efficient Market Hypothesis (EMH), a investing hypothesis created by Eugene Fama (this guy won a Nobel Prize in economic sciences and is among the greatest investing geniuses to ever live by the way). I am not gonna explain everything about this hypothesis as y'all don't necessarily need to know everything about it, and also this thread would get too complex if I included that here, but I can make a thread about that in the future if yall want.

“Ok, 90% of professional investing fund managers couldnt outperform the market average… But what about the 10% of these professionals that could outperform the market?” The following study analyzed these fund performances, and concluded that they did not generate alpha, and that they outperformed the market because of pure luck. This is a very reasonable conclusion, since the evidence shows us that the vast majority of professionals that outperformed the market during a 10 year period tend to underperform it in the 10 years following this "lucky" period they have. If it was because they are skilled managers, they would be able to keep doing it consistently for various decades. But thats not the case. This study is linked down below:

On Persistence in Mutual Fund Performance on JSTOR

Mark M. Carhart, On Persistence in Mutual Fund Performance, The Journal of Finance, Vol. 52, No. 1 (Mar., 1997), pp. 57-82

www.jstor.org

Even WARREN BUFFETT, which is widely known as the GREATEST INVESTOR OF ALL TIME, cannot significantly outperform the market average in today’s age. Look at this graphic comparing his company’s (Berkshire Hathaway) performance to the american market’s average (S&P500):

He used to outperform the market by a large margin from 1970 - 1998, thats why he is regarded as the greatest. But his performance, since 1999, has been very similar to the average.

So you might be thinking: “Well… If not even the best professional investors in the world can beat the stock market average, then what should I do?”, right? Well, fortunately, there is a pretty simple solution to that, and it's called “Passive investing"

PASSIVE INVESTING

Passive investing basically consists of investing in ETF's.

ETF stands for “Exchange-traded fund”, and its basically a fund that is negotiated in the stock market, and that, generally, invests in the same stocks that make the market index (index = a group of stocks that represent the whole stock market), thus copying the stock market’s performance. It's a passive investing fund, as it doesnt have a manager trying to "FiNd UnDeRpRiCeD sToCkS". It literally just copies the index. And do you remember how 90% of professional fund managers can’t beat the market index? That means by investing in one of these "ETFs", your performance would be better than 90% of investing managers, and even Warren Buffett, the greatest investor of all time, wouldn't be able to outperform you by a significant margin. Sounds good, doesn't it?

For investing in these ETFs, I recommend opening a brokerage account on an american broker, so that you have access to the american stock market. I am not gonna teach you how to do it because you can easily find that type of information on the internet. It's a simple process and will take you like 20 minutes. You should do it because the American stock market has way more ETF options than any other country’s stock market.

In the american stock market, you will have access to global ETFs (ETFs that copy the global stock market index), and this is great, because globally diversifying your investing portfolio is a very rational decision. Take Japan's stock market index, “Nikkei 225”, as an example: it has literally been “walking sideways” and stuck in the same position for like 30 years. How can you guarantee this won't happen to your country? You can't. But if you invest globally, this won't be a problem, because, when combining all the countries, the global stock market has never had a larger losing period than 6 years. In the long run, it's always positive. ALWAYS.

I will save you some time: The most widely known ETF that copies the global index is called “VT”. Just search up “VT ETF” and you will be able to find all the information about it. It is owned by Vanguard which is among the biggest, most popular and most reliable investing management companies in the world. By investing in it, you will, as proven before, outperform 90% of investing managers. Here is a screenshot I took from VT's performance since 2008 (dont mind the shitty quality of my screenshot, I dont know why its that bad) (also the text on the screenshot is in portuguese because I live in Brazil, just saying that so yall dont get confused lol). You can also find this graphic by just searching up "VT ETF" on google.

View attachment 3087817

See how the price of the ETF literally more than doubled since then. That means that if someone invested 1 million dollars in it in 2008, and never invested more money there, they would have more than 2 million dollars nowadays. And I'll remind you again: The studies I showed you proved that this performance is better than 90% of professional investors. Thats how good it is. And you get it by simply investing in this ETF, without having to analyze "which stock is better than the other" and all that stuff.

But you need to remember how investing works: its not something that makes you rich overnight. Remember: SHORT TERM INVESTING IS BULLSHIT, and I already proved that to you before as well. If you are going to invest in this, you should, each month, separate some money from your salary to put on this ETF. And you should KEEP YOUR MONEY THERE. Do not be selling your ETF shares because “X person said this” or “Y person said that”. Just remember how everyone sold their stocks during the covid pandemic, and how they lost a lot of money doing that.

Its very common for people to see the price of their stocks/ETFs go down during a crisis, become desperate, and sell their shares because they are “scared to lose more money”. But by doing this they are actually missing out on the post-crisis gains. In every single crisis of the history of the world, the stock market dropped, but rapidly came back after that. Look at the world’s stock market index and see how it always comes back up after going down because of a global crisis.

(unfortunately this graphic only goes until 2019 and I couldnt find a graphic that highlights the financial crisis timeline that went past 2019. If you would like to see how this graphic goes after 2019, you can search up on google "MSCI World Index graphic" and go to "images").

So, dont be desperate. Do not sell your ETF shares. Keep holding them and buying more month by month. Each year you will have more money invested, until your expected yearly returns of 7% - 10% represent an amount of money that is large enough for you to live off it, and retire from your actual job. How much time this will take depends on how much money you make per month from your job. Investing, when done right, is a way to make you be able to retire earlier, and a way to build your financial empire during your whole lifetime. That's how every legendary investor got rich, and if anyone says something like “Invest in this magic investment for 1 year and you will suddenly become rich”, please dont listen to them, because they are 100% scamming you.

So… As I said, VT is a great ETF option for you to copy the global market index. And, referring to the money you separated to invest in the stock market, if you want to invest everything in VT, that's completely valid, because this is not a “super risky” way to invest, as you will be diversifying your money globally (also, VT has more than 9000 stocks in it, so you are not “putting all of your eggs in one basket”). Plus, remember that by investing in it your performance will be better than 90% of professional fund managers. I am being a bit repetitive on that because its for you to see how great of an investment option it is.

So, if you were to stop reading the thread right now and invested in VT, this would be a great approach to your investments.

But, if you want to get more advanced and boost your returns even more, be welcome to learn how to be a FACTOR INVESTOR. I will teach you how to do it in the next paragraphs so pay close attention.


FACTOR INVESTING

Factor investing consists on investing on stocks that have exposure to some certain "risk factors"

As we saw by the studies mentioned in this thread, it's not possible to generate alpha (higher levels of return with low levels of risk). If you want to have a higher performance, you need to take more risks. So, you might be asking yourself: “Does that mean that if we PURPOSEFULLY invest in riskier stocks, we will outperform the stock market index, as the levels of expected returns are always proportionate to the levels of risk that a stock has?”, and the answer to that is: Yes, there is a way to do this. Ladies and gentleman, I present to you the art of FACTOR INVESTING.

Do you remember when I mentioned Eugene Fama? That guy that won the Economic Sciences Nobel Prize? Well, he also dedicated a part of his career as a researcher to find out which types of stocks were riskier than others. And, to find that out, he, along with his research partner Kenneth French, developed several models. (The most famous ones were the "CAPM", the "three factor model" and the "five factor model"). These models were an attempt to try to determine which factors make a stock riskier than the others. And, with the evolution of these models, they have been able to find out several risk factors that make stocks riskier and, consequently, more profitable for the investor in the long term.

The two main factors you need to focus on are: Size and Value.

The size factor works in a way that stocks of smaller companies (in terms of market cap) tend to be riskier than stocks of big cap companies.

The value factor works in a way that value stocks (stocks with a lower price) tend to have higher levels of risk associated with them, when compared to stocks with a higher price.

(There are also other factors such as "profitability", "investment level of the company", "momentum" and "market beta", but these are all either not 100% well accepted by the current researchers we have, or not accessible in the investment options available to average investors).

So, how could we factor invest using the size and value risk factors? The good news is that there are specialized factor investing ETFs that copy indexes that are composed of value stocks and small cap stocks, thus tending to outperform the overall market index, and boost your returns even more. The bad news is that the factor investing industry is relatively new. So far, we only have high quality factor investing ETFs that target the US market, not the global market. But there is still a way for us to take advantage of this, as the US represents roughly 55% of the global stock market. So we can invest 55% of our money in a factor investing ETF that targets the US, and 45% of our money in a total market ETF that targets the rest of the world, excluding the US (yes, there are ETFs that do this).

The US factor investing ETF is called “IJS”. it targets small cap value stocks (stocks of small companies and that have a low stock price, basically investing accordingly to the value and size factors). And The global Ex-US (excluding US) ETF is called “VXUS”

So, here is a quick summary of the routes you can follow:

- If you want to just generically invest on the global stock market, you can put 100% of your money in VT.
- If you want to use factor investing to boost your returns, my suggestion is for you to invest 55% in IJS and 45% in VXUS.
Both of these options are completely valid. I, personally, am a factor investor, but I also know very intelligent people who know a lot about investments that only invest in VT as they prefer a more simplistic approach to investing, which is completely fine as well.

All of these ETFs are available in the American stock market

So, basically I gave you, for free, all the information you need to know to invest better than a professional investing fund manager. Plus I literally gave you the names of the things you should invest in. Most paid investing courses are very expensive and the methods that most of them teach don't come close to this strategy, as this is objectively the best way to invest your money in the stock market according to the data that we currently have.

You are welcome

And, if you want to learn more about investments, I suggest visiting Ben Felix’s youtube channel. As I said before, he is a CFA, which means he has the highest status investing certification in the world, and he is the one who introduced me to this investing strategy. For the most complete education possible, I suggest scrolling down to his first video and, starting from there, watching all of his videos on chronological order. Here is the link to his channel: www.youtube.com/@BenFelixCSI

If yall have any doubts, just send them here in this thread and I’ll try to answer everyone.

(BOTB Worthy?)

Some guys asked me to tag them in this thread so here ya go: @PseudoMaxxer @user123456 @ShawarmaFilth @Tylermax @oppastoppathe2nd​

Basically you wrote the Bible just to say “invest in ETF”, you are right that’s pretty much obviously that generally speaking ETFs are the way to go, everything said in this post feels like water to me, maybe is just a coincidence

 

[uksucks]

Welcome to my megaguide on how to invest your money in the best way possible.

I’ll teach you the objectively best way to invest your money, and I’ll show PROOF that this way of investing gives you better results than the ones PROFESSIONAL INVESTING FUND MANAGERS get.

This is NOT clickbait, because there is academic research that proves that this strategy outperforms professional investors, and I will include these academic papers in this thread so that you have access to them

After learning everything that is in this thread you will be ready to be ahead of 99,9% of people when it comes to investing your money.

I hope yall enjoy this guide. Lets go.

WHERE TO INVEST?

Before talking about how to invest, we need to figure out what we should invest in. Stocks? Crypto? Dollar? Bonds? Well, the answer to this is quite simple. Take a look at the graphic below:

As we can see, when compared to other asset classes, stocks have (since 1802) outperformed basically everything consistently, by a very large margin. This would be enough for me to show you how they are obviously better and more profitable than Dollar, Gold, Bills and Bonds.

But, if you pay attention to the graphic, you’ll see that crypto is not included there. So what about crypto then? Is it better than stocks?

The answer, based on the current research, is that it is not. because of the simple fact that their expected returns are unknown. This is the general consensus in the academic investing space, as researchers couldn't figure out a way to reliably predict their returns. That means that crypto is completely unpredictable and highly speculative. Don't be a fool, yall. If the most capable people couldn’t do it, you are not gonna be the next genius to reliably predict the expected returns of investing in crypto, so it's not a reliable investing option.

Plus, the most reasonable possibility, according to the past performance of crypto in general, is that they behave in a similar way to a type of stocks called "small cap growth stocks", and these stocks are not the ones you should focus on if you want to invest in the most optimal way.

If you wanna go more in depth about why crypto is not a good investing option, check the following video linked below, from 34:37 to 51:36. This is an interview with Ben Felix, who has the CFA certification (literally the highest status investment certification in the world), and he goes deeper on why crypto is not worth it.

Ben Felix Talks Investing in Crypto, Revolutionary Tech, and Academic Research

The conclusion is: Stocks are the best investing option in the world, and in the following paragraphs, I will teach you how to invest in them in the best way possible for you to moneymax.

HOW TO INVEST IN STOCKS?

We can, initially, separate the stock market investing strategies into two groups (spoiler: one of them is completely bullshit):

Long term investing and short term investing

Long term investing works by investing in stocks basically with the goal of building your “money empire” during your lifetime.
Short term investing, as known as trading, works by buying and selling stocks in the short term, sometimes even in the same day (as known as day trading), with the goal of selling the stock by a higher price than the one you paid when you bought it.

Short term investing is 100% bullshit. This happens because EVERY. SINGLE. PIECE. OF. DATA. that we have leads to the same conclusions: it doesnt work. Here are some of the studies that prove what I am saying:

https://faculty.haas.berkeley.edu/odean/papers current versions/individual_investor_performance_final.pdf (this study found out that active traders underperformed the market average by 10.3 percent annually).

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2535636 (to summarize the findings of this study, take a look at this direct quote taken from it: “day trading is an industry that consistently and reliably loses money. From an industrial organization perspective, it is difficult to understand how such an industry survives. For people to knowingly day trade, most must either be overconfident about their prospects of success or derive non-financial utility from the activity and knowingly suffer losses as a result.”)

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3423101 (this study found out that literally 99% of the day traders LOSE money. It's not even like they have positive but below average results. They literally lose money. 99% of them, statistically).

Clearly short term investing is not the best alternative for you. You should invest for the long term. And if you want to learn how to do it in the best way possible, pay attention to the following paragraphs, because I'm gonna teach you how to actually do it.

First of all, you need to understand what would be an average, a good and a bad stock for you to invest. Take a look at the following graphic:

This is very important for you to understand how to invest in stocks. This is the risk-return graphic, and it is very simple: the higher the risk of a certain stock, the higher the expected returns of that stock tend to be (consider “returns” as the extra money you make from investing in that stock). There is a complex reason behind why that happens, but there is no need for me to go in depth about why this happens. What you need to know is that it is true, this is basic level investing knowledge and there is literally no one in the whole investing industry that disagrees with that. The higher the risk, the higher the return.

Now, take a look at the illustration I made in the graphic (I added a red dot and a blue dot. Consider each of them as a different stock):

Which of these two stocks would you consider the better stock for you to invest in? If you said “the blue one” because it offers higher returns, you are wrong, because even though it offers higher returns, it also has a higher level of risk associated with it, and it's not necessarily better than the red one that has lower levels of risk and lower levels of return. Conservative investors that dont wanna be too risky might choose the red one. Investors that are willing to take some more risk for higher expected returns might choose the blue one. But, objectively, there is no “better” one between these two stocks, because they have the SAME RISK/RETURN RATIO.

Now, take a look at this other example:

Now, in THIS case, the blue stock is objectively better than the red one, as it offers the same levels of return, with a lower risk. This means it has a better risk/return ratio and is an objectively better stock, because by investing in this stock you would generate ALPHA. Alpha, in the stock market, is what we call a better than average risk/return ratio. These would be the stocks that really bring abnormally good results for you as an investor.

This is the type of stocks that professional fund managers (basically the most qualified people in the world to select stocks to invest in) try to find, and they do that by searching for UNDERPRICED stocks (stocks that have a price that is too low compared to the price they should have), as, in theory, an underpriced stock would have a better risk/return ratio. And there are a lot of techniques they use to find these underpriced stocks. These techniques are called valuation techniques.

There is one problem though… The data shows us that… They can't do it.

Think about it: Fund managers, when looking for underpriced stocks, tend to invest in stocks that have a lower price (obviously), and stocks with lower price (as known as value stocks) are usually associated with higher levels of risk (you are going to understand why that happens later in this thread). So, if they were being successful in finding the underpriced stocks (and generating alpha), their returns should be exceptionally higher than the stock market average, right? Well… That does not happen, and i’ll show you a study that proves that:

The study in question is called “SPIVA”, and it is directed by Standard & Poor’s (S&P) which is the same company responsible for creating the american stock market’s index. They analyzed the performance of actively managed investing funds in stock markets all over the world for more than 15 years, and the findings are surprising:

They found that, after 15 years, nearly 90% of the investing funds UNDERPERFORMED the market (had a lower than average return). Here is the part of the study that comes to this conclusion:

This is the US part of the study. But they also analyzed latin america, europe, asia, africa and australia, and the results are similar for every region of the world. Fund managers are the most intellectually capable professionals to try to do it, yet they still can't outperform the market average. here is the link to this research: https://www.spglobal.com/spdji/en/research-insights/spiva/

And what do these results mean? They mean that it's not possible to find “underpriced” stocks, because if it was possible, investing fund managers would be able to find them and outperform the stock market. But they can't. Which means that you cannot generate alpha (having higher returns with lower levels of risk) in the stock market.

This happens because of the Efficient Market Hypothesis (EMH), a investing hypothesis created by Eugene Fama (this guy won a Nobel Prize in economic sciences and is among the greatest investing geniuses to ever live by the way). I am not gonna explain everything about this hypothesis as y'all don't necessarily need to know everything about it, and also this thread would get too complex if I included that here, but I can make a thread about that in the future if yall want.

“Ok, 90% of professional investing fund managers couldnt outperform the market average… But what about the 10% of these professionals that could outperform the market?” The following study analyzed these fund performances, and concluded that they did not generate alpha, and that they outperformed the market because of pure luck. This is a very reasonable conclusion, since the evidence shows us that the vast majority of professionals that outperformed the market during a 10 year period tend to underperform it in the 10 years following this "lucky" period they have. If it was because they are skilled managers, they would be able to keep doing it consistently for various decades. But thats not the case. This study is linked down below:

On Persistence in Mutual Fund Performance on JSTOR

Mark M. Carhart, On Persistence in Mutual Fund Performance, The Journal of Finance, Vol. 52, No. 1 (Mar., 1997), pp. 57-82

www.jstor.org

Even WARREN BUFFETT, which is widely known as the GREATEST INVESTOR OF ALL TIME, cannot significantly outperform the market average in today’s age. Look at this graphic comparing his company’s (Berkshire Hathaway) performance to the american market’s average (S&P500):

He used to outperform the market by a large margin from 1970 - 1998, thats why he is regarded as the greatest. But his performance, since 1999, has been very similar to the average.

So you might be thinking: “Well… If not even the best professional investors in the world can beat the stock market average, then what should I do?”, right? Well, fortunately, there is a pretty simple solution to that, and it's called “Passive investing"

PASSIVE INVESTING

Passive investing basically consists of investing in ETF's.

ETF stands for “Exchange-traded fund”, and its basically a fund that is negotiated in the stock market, and that, generally, invests in the same stocks that make the market index (index = a group of stocks that represent the whole stock market), thus copying the stock market’s performance. It's a passive investing fund, as it doesnt have a manager trying to "FiNd UnDeRpRiCeD sToCkS". It literally just copies the index. And do you remember how 90% of professional fund managers can’t beat the market index? That means by investing in one of these "ETFs", your performance would be better than 90% of investing managers, and even Warren Buffett, the greatest investor of all time, wouldn't be able to outperform you by a significant margin. Sounds good, doesn't it?

For investing in these ETFs, I recommend opening a brokerage account on an american broker, so that you have access to the american stock market. I am not gonna teach you how to do it because you can easily find that type of information on the internet. It's a simple process and will take you like 20 minutes. You should do it because the American stock market has way more ETF options than any other country’s stock market.

In the american stock market, you will have access to global ETFs (ETFs that copy the global stock market index), and this is great, because globally diversifying your investing portfolio is a very rational decision. Take Japan's stock market index, “Nikkei 225”, as an example: it has literally been “walking sideways” and stuck in the same position for like 30 years. How can you guarantee this won't happen to your country? You can't. But if you invest globally, this won't be a problem, because, when combining all the countries, the global stock market has never had a larger losing period than 6 years. In the long run, it's always positive. ALWAYS.

I will save you some time: The most widely known ETF that copies the global index is called “VT”. Just search up “VT ETF” and you will be able to find all the information about it. It is owned by Vanguard which is among the biggest, most popular and most reliable investing management companies in the world. By investing in it, you will, as proven before, outperform 90% of investing managers. Here is a screenshot I took from VT's performance since 2008 (dont mind the shitty quality of my screenshot, I dont know why its that bad) (also the text on the screenshot is in portuguese because I live in Brazil, just saying that so yall dont get confused lol). You can also find this graphic by just searching up "VT ETF" on google.

View attachment 3087817

See how the price of the ETF literally more than doubled since then. That means that if someone invested 1 million dollars in it in 2008, and never invested more money there, they would have more than 2 million dollars nowadays. And I'll remind you again: The studies I showed you proved that this performance is better than 90% of professional investors. Thats how good it is. And you get it by simply investing in this ETF, without having to analyze "which stock is better than the other" and all that stuff.

But you need to remember how investing works: its not something that makes you rich overnight. Remember: SHORT TERM INVESTING IS BULLSHIT, and I already proved that to you before as well. If you are going to invest in this, you should, each month, separate some money from your salary to put on this ETF. And you should KEEP YOUR MONEY THERE. Do not be selling your ETF shares because “X person said this” or “Y person said that”. Just remember how everyone sold their stocks during the covid pandemic, and how they lost a lot of money doing that.

Its very common for people to see the price of their stocks/ETFs go down during a crisis, become desperate, and sell their shares because they are “scared to lose more money”. But by doing this they are actually missing out on the post-crisis gains. In every single crisis of the history of the world, the stock market dropped, but rapidly came back after that. Look at the world’s stock market index and see how it always comes back up after going down because of a global crisis.

(unfortunately this graphic only goes until 2019 and I couldnt find a graphic that highlights the financial crisis timeline that went past 2019. If you would like to see how this graphic goes after 2019, you can search up on google "MSCI World Index graphic" and go to "images").

So, dont be desperate. Do not sell your ETF shares. Keep holding them and buying more month by month. Each year you will have more money invested, until your expected yearly returns of 7% - 10% represent an amount of money that is large enough for you to live off it, and retire from your actual job. How much time this will take depends on how much money you make per month from your job. Investing, when done right, is a way to make you be able to retire earlier, and a way to build your financial empire during your whole lifetime. That's how every legendary investor got rich, and if anyone says something like “Invest in this magic investment for 1 year and you will suddenly become rich”, please dont listen to them, because they are 100% scamming you.

So… As I said, VT is a great ETF option for you to copy the global market index. And, referring to the money you separated to invest in the stock market, if you want to invest everything in VT, that's completely valid, because this is not a “super risky” way to invest, as you will be diversifying your money globally (also, VT has more than 9000 stocks in it, so you are not “putting all of your eggs in one basket”). Plus, remember that by investing in it your performance will be better than 90% of professional fund managers. I am being a bit repetitive on that because its for you to see how great of an investment option it is.

So, if you were to stop reading the thread right now and invested in VT, this would be a great approach to your investments.

But, if you want to get more advanced and boost your returns even more, be welcome to learn how to be a FACTOR INVESTOR. I will teach you how to do it in the next paragraphs so pay close attention.


FACTOR INVESTING

Factor investing consists on investing on stocks that have exposure to some certain "risk factors"

As we saw by the studies mentioned in this thread, it's not possible to generate alpha (higher levels of return with low levels of risk). If you want to have a higher performance, you need to take more risks. So, you might be asking yourself: “Does that mean that if we PURPOSEFULLY invest in riskier stocks, we will outperform the stock market index, as the levels of expected returns are always proportionate to the levels of risk that a stock has?”, and the answer to that is: Yes, there is a way to do this. Ladies and gentleman, I present to you the art of FACTOR INVESTING.

Do you remember when I mentioned Eugene Fama? That guy that won the Economic Sciences Nobel Prize? Well, he also dedicated a part of his career as a researcher to find out which types of stocks were riskier than others. And, to find that out, he, along with his research partner Kenneth French, developed several models. (The most famous ones were the "CAPM", the "three factor model" and the "five factor model"). These models were an attempt to try to determine which factors make a stock riskier than the others. And, with the evolution of these models, they have been able to find out several risk factors that make stocks riskier and, consequently, more profitable for the investor in the long term.

The two main factors you need to focus on are: Size and Value.

The size factor works in a way that stocks of smaller companies (in terms of market cap) tend to be riskier than stocks of big cap companies.

The value factor works in a way that value stocks (stocks with a lower price) tend to have higher levels of risk associated with them, when compared to stocks with a higher price.

(There are also other factors such as "profitability", "investment level of the company", "momentum" and "market beta", but these are all either not 100% well accepted by the current researchers we have, or not accessible in the investment options available to average investors).

So, how could we factor invest using the size and value risk factors? The good news is that there are specialized factor investing ETFs that copy indexes that are composed of value stocks and small cap stocks, thus tending to outperform the overall market index, and boost your returns even more. The bad news is that the factor investing industry is relatively new. So far, we only have high quality factor investing ETFs that target the US market, not the global market. But there is still a way for us to take advantage of this, as the US represents roughly 55% of the global stock market. So we can invest 55% of our money in a factor investing ETF that targets the US, and 45% of our money in a total market ETF that targets the rest of the world, excluding the US (yes, there are ETFs that do this).

The US factor investing ETF is called “IJS”. it targets small cap value stocks (stocks of small companies and that have a low stock price, basically investing accordingly to the value and size factors). And The global Ex-US (excluding US) ETF is called “VXUS”

So, here is a quick summary of the routes you can follow:

- If you want to just generically invest on the global stock market, you can put 100% of your money in VT.
- If you want to use factor investing to boost your returns, my suggestion is for you to invest 55% in IJS and 45% in VXUS.
Both of these options are completely valid. I, personally, am a factor investor, but I also know very intelligent people who know a lot about investments that only invest in VT as they prefer a more simplistic approach to investing, which is completely fine as well.

All of these ETFs are available in the American stock market

So, basically I gave you, for free, all the information you need to know to invest better than a professional investing fund manager. Plus I literally gave you the names of the things you should invest in. Most paid investing courses are very expensive and the methods that most of them teach don't come close to this strategy, as this is objectively the best way to invest your money in the stock market according to the data that we currently have.

You are welcome

And, if you want to learn more about investments, I suggest visiting Ben Felix’s youtube channel. As I said before, he is a CFA, which means he has the highest status investing certification in the world, and he is the one who introduced me to this investing strategy. For the most complete education possible, I suggest scrolling down to his first video and, starting from there, watching all of his videos on chronological order. Here is the link to his channel: www.youtube.com/@BenFelixCSI

If yall have any doubts, just send them here in this thread and I’ll try to answer everyone.

(BOTB Worthy?)

Some guys asked me to tag them in this thread so here ya go: @PseudoMaxxer @user123456 @ShawarmaFilth @Tylermax @oppastoppathe2nd​

Lumping crypto all together is a mistake.

All fiat money dies one day. It's all going to zero.

It's gradual until it's sudden and then most people are screwed.

countries like Argentina will be the first to realise this.

7-10% ETF returns per year seriously? Jfl inflation was 18% in one year in USA recently and inflation is cumulative

so youre gonna be a millionaire when you're 50? Firstly, a million dollars will be worth fuck all then, secondly who cares about when you're 60 on deaths doorstep.

if you're young/don't have dependencies, you can probably afford more risk allocation than index and mutual finds jfl

 

[geenger]

Lumping crypto all together is a mistake.

All fiat money dies one day. It's all going to zero.

It's gradual until it's sudden and then most people are screwed.

countries like Argentina will be the first to realise this.

7-10% ETF returns per year seriously? Jfl inflation was 18% in one year in USA recently and inflation is cumulative

so youre gonna be a millionaire when you're 50? Firstly, a million dollars will be worth fuck all then, secondly who cares about when you're 60 on deaths doorstep.

if you're young/don't have dependencies, you can probably afford more risk allocation than index and mutual finds jfl

I love when people like you talk with such confidence even without knowing what they're talking about.

The stock returns adapt to the inflation in a way that if inflation increases, the expected stock returns proportionally increase as well, and if you had read my replies here you would've learned that.

Stocks protect you from inflation in the long term because there has to always be a risk premium. You probably dont even know what that is and yet youre acting like you know something about how inflation affects stocks. You dont. If you wanna learn more about that I suggest you search about what the risk premium is in stocks. Or read the book "Stocks for the long run" by Jeremy Siegel.

About risk allocation, there is not a stock market investing strategy that will expose yourself to more risk than factor investing. Youre literally investing in the riskiest way you can, and consequently maximizing your returns. Unless youre talking about crypto, and I already made my point about why I dont consider it a good investment option. And if you wanna make your point about why you think Im wrong about that, you should use some arguments, studies, data, or any kind of evidence to support your claims, because just saying "lumping crypto altogether is a mistake" or "all fiat money dies one day" without giving out any arguments is not gonna help you that much buddy.

 

[geenger]

Oh boy another stocks dude. Crypto is the same as stocks except it's on the internet. Stocks are dead.

I provided evidence to support my claim that crypto is not a good investment. You didnt. so if you wanna try to prove me wrong, I suggest you use some data, studies, or any kind of evidence to support your claims. Because just saying "Crypto is the future" is not gonna do much for you buddy.

 

[geenger]

And if you spend 10 years in acquiring knowledge and getting job or learning business you can earn 100,000.00 every month. You are not saving to live good dummy, try something else

First of all: youre delusional. Second: after earning 100,000.00 every month, as you say you will, what do you rather do with the money you have? Hide all of it under your bed? Or invest it in a smart way? Oh now it seems like investing isnt that useless anymore huh?

 

[Roge]

First of all: youre delusional. Second: after earning 100,000.00 every month, as you say you will, what do you rather do with the money you have? Hide all of it under your bed? Or invest it in a smart way? Oh now it seems like investing isnt that useless anymore huh?

Spend it the dumbest way and enjoy my life. Didn't cross your incel mind, did it?

 

[geenger]

Spend it the dumbest way and enjoy my life. Didn't cross your incel mind, did it?

Im not an incel like most of yall, btw its crazy how the guy who has 3000 posts is the one calling me an incel lol.

But getting to the point, this thread was made to help those people who dont wanna spend all of their money, to invest better, If this thread doesnt apply to you because you wanna spend every single dollar then just move on, because this thread was not made for people like you

 

[uksucks]

I love when people like you talk with such confidence even without knowing what they're talking about.

The stock returns adapt to the inflation in a way that if inflation increases, the expected stock returns proportionally increase as well, and if you had read my replies here you would've learned that.

Stocks protect you from inflation in the long term because there has to always be a risk premium. You probably dont even know what that is and yet youre acting like you know something about how inflation affects stocks. You dont. If you wanna learn more about that I suggest you search about what the risk premium is in stocks. Or read the book "Stocks for the long run" by Jeremy Siegel.

About risk allocation, there is not a stock market investing strategy that will expose yourself to more risk than factor investing. Youre literally investing in the riskiest way you can, and consequently maximizing your returns. Unless youre talking about crypto, and I already made my point about why I dont consider it a good investment option. And if you wanna make your point about why you think Im wrong about that, you should use some arguments, studies, data, or any kind of evidence to support your claims, because just saying "lumping crypto altogether is a mistake" or "all fiat money dies one day" without giving out any arguments is not gonna help you that much buddy.

Stocks don't give a 10x return every 4 years like bitcoin has done. And you ignored what I said about being wealthy at age 60. S&p500 inflation adjusted only more than doubled in the last 10 years. You're never building real wealth with that. I never said it was bad for keeping wealth relative to fiat but you're not getting wealthy from index funds unless you start wealthy.
Also I meant hyperinflation. Your stocks which are dependent on the CEO and company execution (out of your control) will not compete with an uncorrelated asset class that is impossible to be hyperinflated and censored (robin hood GME fiasco)

 

[geenger]

S&p500 inflation adjusted only more than doubled in the last 10 years. You're never building real wealth with that.

Yes you will lol. Considering historically reasonable yearly returns of 10%, if you invest 500 dollars per month (which is not much and if you have a decent career you should be able to invest more than that), after 10 years, you will have 100,000.00 dollars.

Also I meant hyperinflation.

It does not matter, stocks will protect you from inflation long term no matter how high it might be, this is basic investments knowledge

Stocks don't give a 10x return every 4 years like bitcoin has done.

Past returns are not good indicatives of future returns, and again this is basic investments knowledge. There is a shit ton of examples of investments from various asset classes that had great returns for a while (sometimes, for even longer than 30 years) and then performed awfully after that. As I said, the expected returns of crypto are unknown in the research field, and this makes it a investment that is not reliable. Its simple. Saying "but the past returns were high" does not disprove my point.

 

[uksucks]

100,000.00 dollars

100k USD after 10 years is not that impressive. That's a huge chunk of your life and nowhere near enough to buy a house outright (mortgages are scams). That's not life changing money unless you were dirt poor.

longer than 30 years) and then performed awfully after that.

You keep saying crypto. I am not talking about crypto. Bitcoin is not the same. It's not a security, it's real money. It has all of functions and properties of money and is superior in virtually every way except shinyness RE gold (not even a property of money).

The case for it grows stronger over time not the opposite. The lindy effect gives very high likelihood that it is not going to turn to shit any time soon.

Again I'm not saying I'm against stocks. Just that there are superior options, fine invest in stocks but owning 0 btc is not smart money. All asymmetric bets in life should be taken. The potential upside is far higher than the risk.

 

[geenger]

You keep saying crypto. I am not talking about crypto. Bitcoin is not the same.

Bitcoin is a cryptocurrency, by definition. But dont worry, I understand why you would prefer it over other cryptos so no need to extend this part of the convo.

Bitcoin is not the same. It's not a security, it's real money.

thats the paradox that a lot of researchers have pointed out about the expected return of cryptocurrencies: how can they be classified? as currencies (real money)? if so, crypto should have no real expected returns (above inflation returns), as currencies do not generate cash flow, which is what determines an asset's expected returns.

The case for it grows stronger over time not the opposite. The lindy effect gives very high likelihood that it is not going to turn to shit any time soon.

the fact that bitcoin is probably still going to be around doesnt change the fact that it's expected returns are still not known, thus not solving the problem of bitcoin being an unreliable and highly speculative investment.

The potential upside is far higher than the risk.

the efficient markets hypothesis prove that such thing is not possible.

owning 0 btc is not smart money.

I think its fine to have like 1 - 5% of your money as bitcoin but thats not what I would personally go for. I understand how tempting it is to invest in crypto just in case it keeps bringing consistently amazing returns, and as I said thats fine but I personally rather keep 100% of my money in assets that have been proven to be reliable investments.

100k USD after 10 years is not that impressive.

considering you only invested 500 dollars per month yes it is impressive.

 

[carnage]

I generally would put my money in ETFs too. Maybe include SnP500. Thank you for the high effort post.

 

[suub2incel]

Welcome to my megaguide on how to invest your money in the best way possible.

I’ll teach you the objectively best way to invest your money, and I’ll show PROOF that this way of investing gives you better results than the ones PROFESSIONAL INVESTING FUND MANAGERS get.

This is NOT clickbait, because there is academic research that proves that this strategy outperforms professional investors, and I will include these academic papers in this thread so that you have access to them

After learning everything that is in this thread you will be ready to be ahead of 99,9% of people when it comes to investing your money.

I hope yall enjoy this guide. Lets go.

WHERE TO INVEST?

Before talking about how to invest, we need to figure out what we should invest in. Stocks? Crypto? Dollar? Bonds? Well, the answer to this is quite simple. Take a look at the graphic below:

As we can see, when compared to other asset classes, stocks have (since 1802) outperformed basically everything consistently, by a very large margin. This would be enough for me to show you how they are obviously better and more profitable than Dollar, Gold, Bills and Bonds.

But, if you pay attention to the graphic, you’ll see that crypto is not included there. So what about crypto then? Is it better than stocks?

The answer, based on the current research, is that it is not. because of the simple fact that their expected returns are unknown. This is the general consensus in the academic investing space, as researchers couldn't figure out a way to reliably predict their returns. That means that crypto is completely unpredictable and highly speculative. Don't be a fool, yall. If the most capable people couldn’t do it, you are not gonna be the next genius to reliably predict the expected returns of investing in crypto, so it's not a reliable investing option.

Plus, the most reasonable possibility, according to the past performance of crypto in general, is that they behave in a similar way to a type of stocks called "small cap growth stocks", and these stocks are not the ones you should focus on if you want to invest in the most optimal way.

If you wanna go more in depth about why crypto is not a good investing option, check the following video linked below, from 34:37 to 51:36. This is an interview with Ben Felix, who has the CFA certification (literally the highest status investment certification in the world), and he goes deeper on why crypto is not worth it.

Ben Felix Talks Investing in Crypto, Revolutionary Tech, and Academic Research

The conclusion is: Stocks are the best investing option in the world, and in the following paragraphs, I will teach you how to invest in them in the best way possible for you to moneymax.

HOW TO INVEST IN STOCKS?

We can, initially, separate the stock market investing strategies into two groups (spoiler: one of them is completely bullshit):

Long term investing and short term investing

Long term investing works by investing in stocks basically with the goal of building your “money empire” during your lifetime.
Short term investing, as known as trading, works by buying and selling stocks in the short term, sometimes even in the same day (as known as day trading), with the goal of selling the stock by a higher price than the one you paid when you bought it.

Short term investing is 100% bullshit. This happens because EVERY. SINGLE. PIECE. OF. DATA. that we have leads to the same conclusions: it doesnt work. Here are some of the studies that prove what I am saying:

https://faculty.haas.berkeley.edu/odean/papers current versions/individual_investor_performance_final.pdf (this study found out that active traders underperformed the market average by 10.3 percent annually).

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2535636 (to summarize the findings of this study, take a look at this direct quote taken from it: “day trading is an industry that consistently and reliably loses money. From an industrial organization perspective, it is difficult to understand how such an industry survives. For people to knowingly day trade, most must either be overconfident about their prospects of success or derive non-financial utility from the activity and knowingly suffer losses as a result.”)

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3423101 (this study found out that literally 99% of the day traders LOSE money. It's not even like they have positive but below average results. They literally lose money. 99% of them, statistically).

Clearly short term investing is not the best alternative for you. You should invest for the long term. And if you want to learn how to do it in the best way possible, pay attention to the following paragraphs, because I'm gonna teach you how to actually do it.

First of all, you need to understand what would be an average, a good and a bad stock for you to invest. Take a look at the following graphic:

This is very important for you to understand how to invest in stocks. This is the risk-return graphic, and it is very simple: the higher the risk of a certain stock, the higher the expected returns of that stock tend to be (consider “returns” as the extra money you make from investing in that stock). There is a complex reason behind why that happens, but there is no need for me to go in depth about why this happens. What you need to know is that it is true, this is basic level investing knowledge and there is literally no one in the whole investing industry that disagrees with that. The higher the risk, the higher the return.

Now, take a look at the illustration I made in the graphic (I added a red dot and a blue dot. Consider each of them as a different stock):

Which of these two stocks would you consider the better stock for you to invest in? If you said “the blue one” because it offers higher returns, you are wrong, because even though it offers higher returns, it also has a higher level of risk associated with it, and it's not necessarily better than the red one that has lower levels of risk and lower levels of return. Conservative investors that dont wanna be too risky might choose the red one. Investors that are willing to take some more risk for higher expected returns might choose the blue one. But, objectively, there is no “better” one between these two stocks, because they have the SAME RISK/RETURN RATIO.

Now, take a look at this other example:

Now, in THIS case, the blue stock is objectively better than the red one, as it offers the same levels of return, with a lower risk. This means it has a better risk/return ratio and is an objectively better stock, because by investing in this stock you would generate ALPHA. Alpha, in the stock market, is what we call a better than average risk/return ratio. These would be the stocks that really bring abnormally good results for you as an investor.

This is the type of stocks that professional fund managers (basically the most qualified people in the world to select stocks to invest in) try to find, and they do that by searching for UNDERPRICED stocks (stocks that have a price that is too low compared to the price they should have), as, in theory, an underpriced stock would have a better risk/return ratio. And there are a lot of techniques they use to find these underpriced stocks. These techniques are called valuation techniques.

There is one problem though… The data shows us that… They can't do it.

Think about it: Fund managers, when looking for underpriced stocks, tend to invest in stocks that have a lower price (obviously), and stocks with lower price (as known as value stocks) are usually associated with higher levels of risk (you are going to understand why that happens later in this thread). So, if they were being successful in finding the underpriced stocks (and generating alpha), their returns should be exceptionally higher than the stock market average, right? Well… That does not happen, and i’ll show you a study that proves that:

The study in question is called “SPIVA”, and it is directed by Standard & Poor’s (S&P) which is the same company responsible for creating the american stock market’s index. They analyzed the performance of actively managed investing funds in stock markets all over the world for more than 15 years, and the findings are surprising:

They found that, after 15 years, nearly 90% of the investing funds UNDERPERFORMED the market (had a lower than average return). Here is the part of the study that comes to this conclusion:

This is the US part of the study. But they also analyzed latin america, europe, asia, africa and australia, and the results are similar for every region of the world. Fund managers are the most intellectually capable professionals to try to do it, yet they still can't outperform the market average. here is the link to this research: https://www.spglobal.com/spdji/en/research-insights/spiva/

And what do these results mean? They mean that it's not possible to find “underpriced” stocks, because if it was possible, investing fund managers would be able to find them and outperform the stock market. But they can't. Which means that you cannot generate alpha (having higher returns with lower levels of risk) in the stock market.

This happens because of the Efficient Market Hypothesis (EMH), a investing hypothesis created by Eugene Fama (this guy won a Nobel Prize in economic sciences and is among the greatest investing geniuses to ever live by the way). I am not gonna explain everything about this hypothesis as y'all don't necessarily need to know everything about it, and also this thread would get too complex if I included that here, but I can make a thread about that in the future if yall want.

“Ok, 90% of professional investing fund managers couldnt outperform the market average… But what about the 10% of these professionals that could outperform the market?” The following study analyzed these fund performances, and concluded that they did not generate alpha, and that they outperformed the market because of pure luck. This is a very reasonable conclusion, since the evidence shows us that the vast majority of professionals that outperformed the market during a 10 year period tend to underperform it in the 10 years following this "lucky" period they have. If it was because they are skilled managers, they would be able to keep doing it consistently for various decades. But thats not the case. This study is linked down below:

On Persistence in Mutual Fund Performance on JSTOR

Mark M. Carhart, On Persistence in Mutual Fund Performance, The Journal of Finance, Vol. 52, No. 1 (Mar., 1997), pp. 57-82

www.jstor.org

Even WARREN BUFFETT, which is widely known as the GREATEST INVESTOR OF ALL TIME, cannot significantly outperform the market average in today’s age. Look at this graphic comparing his company’s (Berkshire Hathaway) performance to the american market’s average (S&P500):

He used to outperform the market by a large margin from 1970 - 1998, thats why he is regarded as the greatest. But his performance, since 1999, has been very similar to the average.

So you might be thinking: “Well… If not even the best professional investors in the world can beat the stock market average, then what should I do?”, right? Well, fortunately, there is a pretty simple solution to that, and it's called “Passive investing"

PASSIVE INVESTING

Passive investing basically consists of investing in ETF's.

ETF stands for “Exchange-traded fund”, and its basically a fund that is negotiated in the stock market, and that, generally, invests in the same stocks that make the market index (index = a group of stocks that represent the whole stock market), thus copying the stock market’s performance. It's a passive investing fund, as it doesnt have a manager trying to "FiNd UnDeRpRiCeD sToCkS". It literally just copies the index. And do you remember how 90% of professional fund managers can’t beat the market index? That means by investing in one of these "ETFs", your performance would be better than 90% of investing managers, and even Warren Buffett, the greatest investor of all time, wouldn't be able to outperform you by a significant margin. Sounds good, doesn't it?

For investing in these ETFs, I recommend opening a brokerage account on an american broker, so that you have access to the american stock market. I am not gonna teach you how to do it because you can easily find that type of information on the internet. It's a simple process and will take you like 20 minutes. You should do it because the American stock market has way more ETF options than any other country’s stock market.

In the american stock market, you will have access to global ETFs (ETFs that copy the global stock market index), and this is great, because globally diversifying your investing portfolio is a very rational decision. Take Japan's stock market index, “Nikkei 225”, as an example: it has literally been “walking sideways” and stuck in the same position for like 30 years. How can you guarantee this won't happen to your country? You can't. But if you invest globally, this won't be a problem, because, when combining all the countries, the global stock market has never had a larger losing period than 6 years. In the long run, it's always positive. ALWAYS.

I will save you some time: The most widely known ETF that copies the global index is called “VT”. Just search up “VT ETF” and you will be able to find all the information about it. It is owned by Vanguard which is among the biggest, most popular and most reliable investing management companies in the world. By investing in it, you will, as proven before, outperform 90% of investing managers. Here is a screenshot I took from VT's performance since 2008 (dont mind the shitty quality of my screenshot, I dont know why its that bad) (also the text on the screenshot is in portuguese because I live in Brazil, just saying that so yall dont get confused lol). You can also find this graphic by just searching up "VT ETF" on google.

View attachment 3087817

See how the price of the ETF literally more than doubled since then. That means that if someone invested 1 million dollars in it in 2008, and never invested more money there, they would have more than 2 million dollars nowadays. And I'll remind you again: The studies I showed you proved that this performance is better than 90% of professional investors. Thats how good it is. And you get it by simply investing in this ETF, without having to analyze "which stock is better than the other" and all that stuff.

But you need to remember how investing works: its not something that makes you rich overnight. Remember: SHORT TERM INVESTING IS BULLSHIT, and I already proved that to you before as well. If you are going to invest in this, you should, each month, separate some money from your salary to put on this ETF. And you should KEEP YOUR MONEY THERE. Do not be selling your ETF shares because “X person said this” or “Y person said that”. Just remember how everyone sold their stocks during the covid pandemic, and how they lost a lot of money doing that.

Its very common for people to see the price of their stocks/ETFs go down during a crisis, become desperate, and sell their shares because they are “scared to lose more money”. But by doing this they are actually missing out on the post-crisis gains. In every single crisis of the history of the world, the stock market dropped, but rapidly came back after that. Look at the world’s stock market index and see how it always comes back up after going down because of a global crisis.

(unfortunately this graphic only goes until 2019 and I couldnt find a graphic that highlights the financial crisis timeline that went past 2019. If you would like to see how this graphic goes after 2019, you can search up on google "MSCI World Index graphic" and go to "images").

So, dont be desperate. Do not sell your ETF shares. Keep holding them and buying more month by month. Each year you will have more money invested, until your expected yearly returns of 7% - 10% represent an amount of money that is large enough for you to live off it, and retire from your actual job. How much time this will take depends on how much money you make per month from your job. Investing, when done right, is a way to make you be able to retire earlier, and a way to build your financial empire during your whole lifetime. That's how every legendary investor got rich, and if anyone says something like “Invest in this magic investment for 1 year and you will suddenly become rich”, please dont listen to them, because they are 100% scamming you.

So… As I said, VT is a great ETF option for you to copy the global market index. And, referring to the money you separated to invest in the stock market, if you want to invest everything in VT, that's completely valid, because this is not a “super risky” way to invest, as you will be diversifying your money globally (also, VT has more than 9000 stocks in it, so you are not “putting all of your eggs in one basket”). Plus, remember that by investing in it your performance will be better than 90% of professional fund managers. I am being a bit repetitive on that because its for you to see how great of an investment option it is.

So, if you were to stop reading the thread right now and invested in VT, this would be a great approach to your investments.

But, if you want to get more advanced and boost your returns even more, be welcome to learn how to be a FACTOR INVESTOR. I will teach you how to do it in the next paragraphs so pay close attention.


FACTOR INVESTING

Factor investing consists on investing on stocks that have exposure to some certain "risk factors"

As we saw by the studies mentioned in this thread, it's not possible to generate alpha (higher levels of return with low levels of risk). If you want to have a higher performance, you need to take more risks. So, you might be asking yourself: “Does that mean that if we PURPOSEFULLY invest in riskier stocks, we will outperform the stock market index, as the levels of expected returns are always proportionate to the levels of risk that a stock has?”, and the answer to that is: Yes, there is a way to do this. Ladies and gentleman, I present to you the art of FACTOR INVESTING.

Do you remember when I mentioned Eugene Fama? That guy that won the Economic Sciences Nobel Prize? Well, he also dedicated a part of his career as a researcher to find out which types of stocks were riskier than others. And, to find that out, he, along with his research partner Kenneth French, developed several models. (The most famous ones were the "CAPM", the "three factor model" and the "five factor model"). These models were an attempt to try to determine which factors make a stock riskier than the others. And, with the evolution of these models, they have been able to find out several risk factors that make stocks riskier and, consequently, more profitable for the investor in the long term.

The two main factors you need to focus on are: Size and Value.

The size factor works in a way that stocks of smaller companies (in terms of market cap) tend to be riskier than stocks of big cap companies.

The value factor works in a way that value stocks (stocks with a lower price) tend to have higher levels of risk associated with them, when compared to stocks with a higher price.

(There are also other factors such as "profitability", "investment level of the company", "momentum" and "market beta", but these are all either not 100% well accepted by the current researchers we have, or not accessible in the investment options available to average investors).

So, how could we factor invest using the size and value risk factors? The good news is that there are specialized factor investing ETFs that copy indexes that are composed of value stocks and small cap stocks, thus tending to outperform the overall market index, and boost your returns even more. The bad news is that the factor investing industry is relatively new. So far, we only have high quality factor investing ETFs that target the US market, not the global market. But there is still a way for us to take advantage of this, as the US represents roughly 55% of the global stock market. So we can invest 55% of our money in a factor investing ETF that targets the US, and 45% of our money in a total market ETF that targets the rest of the world, excluding the US (yes, there are ETFs that do this).

The US factor investing ETF is called “IJS”. it targets small cap value stocks (stocks of small companies and that have a low stock price, basically investing accordingly to the value and size factors). And The global Ex-US (excluding US) ETF is called “VXUS”

So, here is a quick summary of the routes you can follow:

- If you want to just generically invest on the global stock market, you can put 100% of your money in VT.
- If you want to use factor investing to boost your returns, my suggestion is for you to invest 55% in IJS and 45% in VXUS.
Both of these options are completely valid. I, personally, am a factor investor, but I also know very intelligent people who know a lot about investments that only invest in VT as they prefer a more simplistic approach to investing, which is completely fine as well.

All of these ETFs are available in the American stock market

So, basically I gave you, for free, all the information you need to know to invest better than a professional investing fund manager. Plus I literally gave you the names of the things you should invest in. Most paid investing courses are very expensive and the methods that most of them teach don't come close to this strategy, as this is objectively the best way to invest your money in the stock market according to the data that we currently have.

You are welcome

And, if you want to learn more about investments, I suggest visiting Ben Felix’s youtube channel. As I said before, he is a CFA, which means he has the highest status investing certification in the world, and he is the one who introduced me to this investing strategy. For the most complete education possible, I suggest scrolling down to his first video and, starting from there, watching all of his videos on chronological order. Here is the link to his channel: www.youtube.com/@BenFelixCSI

If yall have any doubts, just send them here in this thread and I’ll try to answer everyone.

(BOTB Worthy?)

Some guys asked me to tag them in this thread so here ya go: @PseudoMaxxer @user123456 @ShawarmaFilth @Tylermax @oppastoppathe2nd​

first i wanne say really good thread and giving the explanation plus studies but i since u seem like you know what ur talking about what is youre oppinion on for exp investing in war companies be4 wars investing in covid mask be4 covid i think u get my idea

 

[geenger]

first i wanne say really good thread and giving the explanation plus studies but i since u seem like you know what ur talking about what is youre oppinion on for exp investing in war companies be4 wars investing in covid mask be4 covid i think u get my idea

Im glad you liked the thread man, and about your question, I already answered it here:

Thanks. And about your question, the answer is no. Its not a good idea to invest in a different way than you would normally, when wars are happening. Because the fact that certain companies are gonna benefit from the war is already reflected on their current stock prices. The prices of these stocks already went up before you even thought about investing in them, its not like you are gonna find out about that before the market, its impossible. Unless you have private information and know before everyone that the war is gonna happen (which I doubt you have), its not a good idea.

 

[swagstar]

Investing on events is not good for you, since you will not benefit from them. This happens because these events that can lead to positive outcomes to certain companies are already reflected on the stock prices, as the market is very fast to incorporate news into the stock prices. So you will experience no benefit from investing like this.

I could go deeper on that by doing another thread explaining how the Efficient Market Hypothesis works, but I feel like it would be too complex/boring for most people here. If yall still want me to do it tho, let me know and i'll do it.

Do it please
And tag me if you alr done it/Are done with it