Dr. Sven, your videos keep getting better and better. The old ones are also good. No one can disagree with the actual data. This is very different than the typical content from reporters and/or salespeople elsewhere. Please keep up the good work.
Its because they are the ones selling the crap. Things like collaterzlized debt MBS or 100 year bonds from Argentina or Tesla Motors shares and bonds. LOL
Sven, I recently conducted an experiment over 6 months where I managed my own portfolio and compared my personal returns with those of a mutual fund my financial adviser put me in several years ago. Factoring fees and other expenses, the mutual fund had a 6% annualized return on investment. My own portfolio's returns were *much* higher. I acted on several of your recommendations as well as my own picks which I researched using the framework provided by Phil Town. Long story short, I fired my financial adviser, sold my mutual funds, and transferred the cash into my own personal account. Thank you for your videos -- especially the ones where you analyze individual stocks.
Hi! 6 months is a really short period of time when investing:-) You should run another experiment, make a virtual portfolio and try to do the opposite, try to lose money on purpose, if you manage to make money on your portfolio and lose on the other, then you system works :-) And, of course, on a longer time frame. But, I am happy to hear you had higher returns, a bit of common sense will always beat the market!
we are in the wrong time to invest in index funds and mutual funds.... every 5th ad on TV in my country is mutual fund!!! stock market is also at its highest ever and stock market agents shows last 5 yr performance!!! Commodity investment/value is out of favor.... thus undervalued.... thus the opportunity. This is why I am a huge fan and aspiring to learn from 'Invest with Sven Carlin' :)
Hey Sven I got to tell you thanks. I sold my index funds and ended up buying 50 shares of JP and some other stocks but just with JP alone I've made $529.5 today. I would have never bought JP if it wasn't for your videos. Thanks
Investing means to be on the correct side of some notion of fair value. If overpaying and expecting a price to go higher, that's not investing but gambling.
"how will my financial life be affected" "How will it affect my wellbeing" .. Great questions Sven, almost preparing us emotionally for what could come, thank you for caring
People think only about now when they think about risk but they should think about risk from a long term perspective. Unfortunately, most never learn and we can buy cheap stocks in panics.
Hey Sven, youre data is a bit skewed, u disregarded dividends. Another thing to keep in mind is that before 1970 there was a deflationary currency namely gold which increased in price, meaning that the actual value of the stocks did actually go up, its just that the increase in goldprice would offset the appreciation. I believe I've red that on average gold increased by around 6% a year on average before fiat currencies were introduced. So say you would have an average of 2% dividends (which seems low especially before tech companies paying hardly any dividend started to take over the markets) you would have an average return of 8%, which is rater in line with the 7% you mentioned. If I'm wrong I would love for someone to correct me.
Good evening Sven, how much quality of content can you find in your past videos? A huge amount !!! This is a spectacular video that everyone should watch and re-watch carefully!
Thanks for this great video Sven - really opened my eyes on index funds as I thought that was the best way for quite a while. Please keep on doing your amazing work (backtracking to your older videos as I am quite new to your channel)
The index MSCI AC World grew only 25% compared to OCT07 (prior 10 y.). I think a big disadvantage is that indexfunds fall very deep and take a lot of time to recover. They run in every bubble (2000: IT, 2007: financial, x: technology).
the reciprocal view is this,,, if you didn't invest in stocks for the 78 year , 30 year mark your money would have lost money due to inflation,, if (for me) investing in stocks keeps up with inflation atleast one is losing buying power,, this is a great informative video
I totally agree with your way of thinking about ETFs and the small lines in between that most people are not aware of. In the last years there is a lot of promotion of the ETFs investing even from RUclips and channels that have nothing to do with investing, making it seem like a sure, automatic and harmless way to invest your money. But on the other hand I have an objection. I think that the believe that anyone can do it by itself is a fallacy. I am not an accomplished investor like yourself, I have little experience and still learning a lot every day (also from you:)) but talking with a lot of people, friends and relatives(some of them also investing) I can clearly say that most people are not capable to invest themselves. Not because of lack of mental ability but because of underestimating the learning and risk that is associated with it and not taking the time to learn. Probably other priorities... Thank you for another great video.
The main problem is that people don't understand the risk reward of their investments and unfortunately the quality of their life depends on it. If you don't understand it, better be in cash.
At this point (globally) - I think Cash is the King. Warren Buffet has 100 billion cash. Keeping even 50% level in cash won't be a bad idea because inflation levels are still too low to erode $ buying power.
1. at 4.43 why did you use house price index instead of snp? 2. What if you factor in dividend returns for holding stock, would it paint a nicer picture? 3. at 5.57 post ww1 gains, where does the high return of the global portfolio come from? Where can I have a look at the global returns? 4. where would u advise we park our money then. thank you kindly for the information and responding to subscriber comments. it cant be easy offering investment advice on youtube, i commend your dedication!
Hi there. I used the housing index just for fund and not to use the S&P 500 index all the time. However it shows the same point. 2. Yes, dividends add 4% over the long term in annual returns but giving that the current dividend is below 2% the signficance of that is much lower now. 3. Try the MSCI indexes. 4. I don't give individual advice, my goal is fore everybody to reach enough financial knowledge to make good investment decisions based on own risk reward appetite.
Having this conversation with retail investors encounters cognitive dissonance, recency bias, status quo, and recency biases. No wonder retail is labeled "dumb money". The rise in retail investors amid the decline in defined benefit plans over the same 35 yr period indicates a historucally high proportion of U.S. investors represent dumb money. I gave up trying to convince friends and family. Their bias is my gain. :)
Unfortunately that is how it works. But imagine a better world where we all get dividend yields of 10% and inflation is just at 2%, wouldn't it be better?
haha, the funny thing is that the book was published in 1994, it has yet to see an opposite trend in interest rates :-) We will see if it will be so famous if interest rates rise for 20 years :-)
I think there are only 2 ways to invest for an average investor in future: dividend strategy with good companies (buy and hold) or stock picking with concentrated portfolio which is riskier. As you mentioned index funds can decrease by more than 50 percent. So I prefer companies of defensive sectors that have a low beta, longterm business model and growing dividends.
remember that in your lifetime everything you own will probably decrease more than 50% at least twice, even the defensive stocks as those depend on interest rates. Nevertheless, much better than owning the S&P 500
I agree with your views on index funds, and what happened to the Nikkie is mostly what keeps me from investing in them. What I'd like to ask is how you view dividend paying stocks, particularly ones focused on dividend growth investing as my portfolio is currently built to focus on a dividend income strategy such that even if the principle ends up being flat for the foreseeable future, the income generated by the dividend will be enough to allow the stocks to sit. It's a mix of growth/value dividend stocks, higher yield dividend payers (such as BDCs and REITS), Aristocrats, and things like T which I consider as a bond substitute. I also agree with you that it's shocking how many people don't take the time to learn about their financial well being.
Hi Demagogue, there is no difference in how the stock pays out the earnings, be it dividends, increased book value or buybacks, well, there is a small difference in cost, buybacks are ok if they are at below book value, dividends unfortunately get taxed again, so the best things is earnings but people don't understand that, Buffett paid only once a dividend of $0.1 and thy tricked him into it :-)
I think you may have misunderstood the question, it was less about how the payout works and more about how certain types of strategies work during market periods. In that dividend stocks function better during both recessions and flat periods.
I have not yet seen data that tells me that. Dividends get often cut in recessions and stocks hammered. So, it is all about what you hold. Generalizing about dividend strategies against others is too vague. Some people love dividends, some don't. I have both in my portfolio but would hold the stocks even if the situation was opposite and those wouldn't pay a dividend at all.
Hi Sven, I'm probably just restating the obvious, but it seems to me that those periods of negative returns are periods to invest, and the periods of positive returns would be periods to either sell, or rest on your laurels and collect dividends. I don't really see volatility as a negative.
The dividend is below 2% and dollar cost averaging would work for those who start investing now. Those who already have built a portfolio now look at it from a different perspective. Nevertheless, DCA and dividends are a much better strategy than plain index funds.
Sven, I truly believe the Dow will soar to levels between 40-50k within the next 4-5 years. But, it will be at these levels that investors come to the realization that the market (Dow) is not real. And it will be at this capitulation point that investors will run into hard assets. This is where PM's prices will go ballistic. My only hope is that government's don't come after private citizen's gold and silver.
That is definitely a possibility, I am not excluding anything at this moment. I try to prepare myself for anything. The government won't come after you gold, hopefully!
Sven, what do you recommend to people with no big expertise in the stock markets. Why is indexing (with relatively low costs) not an alternative? The timing approach is for most people not profitable, that even show the weak long-term performance of hedge-funds and active managed funds. .
Hey Sven, is that really fair to consider inflation adjusted returns when the alternative is to hold cash forever waiting for stocks to crash? I wanted to start investing in the stock market and already had a plan but after I started watching your videos I have no clue anymore.
If you have no clue means that there is more to learn:-) However, the best learning is done by doing, so start, learn, you might lose, you might win, if you constantly learn, you will find what works for you and do well over time, that is the key: over time.
Sven thanks for the vid's I appreciate the insight. I retired in 2012 and in 2013 put 25% of my portfolio into non correlated investments. I have Business Development Stocks for dividends they throw off and some mutual funds that are growth and value plus some blue chips. I know from investing since 1980 that the market will take almost everything down. I know I need to re-balance and take my lumps paying taxes but where do I put funds that have less risk? Bonds as the interest rates rise is not a good solution thus to me commodities seem the best call for less down side but also less upside. Your thoughts? Oh and I watched some REITs I owned also tumble. Thanks again for the education.
"The best estimate for the S&P500 in the next 40 years is just 4%". May I ask you how did you reach to this conclusion? I am interested to understand please becase i am fully invested in index funds for the past 11 years and i can find very few actively managed fund that beat a 2 etf portfolio net fees and inflation !
I am not form the U.S. and thus DRIP doesn't apply to me. As I constantly rebalance my risk a DRIP investment strategy can't be applied. Also I am not focused on dividends, it doesn't matter to me in what way the returns come, capital appreciation, increased book value, dividends.
Can we still earn money with index funds using a mixed allocation of assets? I strongly disagree with the idea of educating myself and increase return by investing in individual stocks, cause I don't feel it worth the hassle. I want to be a Pareto maximalist and a passive investor. Please help with your valuable advice, Sir!
Sticking to Pareto, it worked well over the last 100 years when the average dividend yield was 5% and inflation 3%.Given that now the inflation is 2% and dividend yield 1.8%, it might be the 20% of bad years ahead for the index fund investors:-) Sorry, I really believe that is too much risk for little return, if any.
@@Value-Investing Yeah, I'm keeping 50% of my cash in short term government bonds waiting for a correction on real estate but I'm wondering what to do with the other half. Robert Kiyosaki says that cash is trash and money have to flow because the currency loses value. On the other hand, right now there is a huge stock bubble which might eventually burst. I was thinking maybe to keep my cash to wait for the big deleveraging that might come and buy S&P 500 with 70% discount. But what will happen with my cash, won't it also devalue with significant amount before the market crash happens? I feel I'm stuck in a lose-lose scenario and I'm the loser Kiyosaki is saying when he refers to savers. At least consumers don't have any money but also no decrease in capital gains from inflation. I have lost 5% of my equity in the last couple of years only from inflation. Is horrible! What is BRK btw? Wayne Buffet's index fund?
@@Value-Investing I mean, I don't know, I do not want to be an active investor. Is it safer/better to just stay on cash and wait for a big market crash either on real estate or stocks? And if the crash happens with a 50% decrease in stocks, should I massively buy stocks with 80% of my budget or something like that or still keep an All Weather approach despite the low price of assets?
I've been watching your videos and find them very insightful. Not sure if you invest in healthcare stocks, but have you heard of APHB? If so what do you think of it? They got EU approval for a drug recently and are currently working towards getting an FDA approval.
Here is my answer to the same question. Do we have any kind of visibility into their future sales? Do we know who will be the seller of 100G to amazon? Do we know if margins will get squeezed in the future? Do we know if the management is trustworthy? Does the company have a moat? All depends on one customer, AMZN with 55% revenue. I have no idea where could this go. For this you need a crystal ball.
Thx for taking the time to look at it. I also did a bit of research in the last days and the most striking finding was exactly that, Amazon and then Microsoft and Cisco in lesser extend comprise for the bulk of the revenue. They have no debt and still making money and in case Amazon continues to buy the 100G it can really triple. But that is the problem, it is blind risk at the moment. After your assessment I feel much more sure. Thx
Your video was actually shortly mentioned in podcast by Nordnet (finnish). They said that you must have used graph data without dividends. Was that only price index with long periods of no return?
He picked worst case scenario for lump-sum investing. And many companies remain profitable even if their stock is down so yes, dividends can make up for around 3-5% typically. If nothing else, let's say 4% dividend with an inflation of around 3% historically still yields 1% per year in worst case.
It's an assumption. There need to be inflation to get higher stock prices in longterm. Would be interesting to know what do you think what the reason is.
We are on the verge of the longest stretch without a 3% or 5% pullback. I wonder if there is a resource where I can find what happens after record UP moves without correction in stock markets? Major central banks are pumping TRILLIONS of $s (every year into the stocks & bonds). Maybe the stock market will go up & never come down.
If you have 2 million and pay 2% fees per year that is 40 k per year. If you keep it there 10 years you have dumped out 400k dollars! Basically you have flushed that money down the toilet.
Hi, I analyzed SQM in depth when the price was at $18, hoped it would fall down to $13 so that I can buy. It didn't :-) As I didn't buy at $18 I am definitely not going to buy at $60. perhaps I am wrong but what can I do :-) As for the stock I think it is booming on the increased metal prices and lithium potential. Long term earnings should be calculated to estimate a fair value.
Your data table showing "What was the worst that could have happened?" seems a bit funcky to me. Certainly the 30-year, 40-year, 50-year columns on the far right. Let's take Austria, France, Germany (last column) at -99.1, -61.5, -88.5 for example. What's the source for this data table? I would take it with a grain of salt. I understand the message you're trying to pass with this video but i doubt the actual data is correct. Prove me otherwise pls. Also, please don't take the shortcut to simply ignore dividends. They are an important part of returns on the long run. I know that you are looking at 'inflation-adjusted' returns here but for most people, they don't understand the difference with their total portfolio returns. In fact, for many people, investing in the stock market and have a return better or equal to the inflation rate (keeping the purchasing power of their money) would actually be a good goal. I know too many people keeping huge amounts of cash on their (savings) accounts & losing money every day... still I enjoyed your video and congratulate you on your education work. But please, link to the data-source in your video description so that we can challenge/check the validity of these data. Keep up the good work, cheers, Hubert.
Of course, the data is skewed by hyperinflation in Germany and the two wars where if you invested in Austria in 1914 the 50 year returns wouldn't be great ;-) I just have the chart from a London school of economics presentation, as soon as I find the article I'll put the link. As for the investing part, I am just saying that people should not invest blindly in index funds, with a bit of common sense I think it is much easier to find better investments (lower risk/higher return. As for the dividend, you are right, it has been a huge part of returns in the past but now it is much much lower. This is not excuse to take things lightly but nevertheless.
Sorry, but picking out the worst possible start and end is just as much cherry-picking as what marketers do picking the the time periods with the steepest increases. Almost nobody invests a big lump of money all at once and doesn't do anything for the next 30-50 years. Most people invest a more or less steady part of their income every month or year. Having stock prices go into a deep valley between your start and end point is the best thing that can happen - provided you stick to investing regularly. And for this it doesn't really matter whether you invest in index funds or individual stocks.
Hi Sven, this is really interesting, but also a bit scary. I have checked it for the DOW. You show a linear chart of the S&P500. For long-term we should use only the Log-Chart, to see the returns in the slope of the graph in all years. From 1940 to 1997 the return in the DOW was in average (!) similar to the return from 1997 until today. 1966 to 1982 the DOW was in a long bear-market. The next bear-market was from 2000 to 2013. 1929 to 1954 was an extreme. We hopefully never see a "great depression" again! And during these bear markets we still get a Dividend. And hopefully we get something from bonds or Gold is giving some return. IMO the end of Bretton Woods marked an important change in the monetary systems worldwide. And of course the long-term falling interest rates are a reason for the steeper increase of stock prices (and all assets) since 1980. And the expected return for the next 8 to 10 years in stocks is negative... d'accord! .
Dr. Sven, your videos keep getting better and better. The old ones are also good. No one can disagree with the actual data. This is very different than the typical content from reporters and/or salespeople elsewhere. Please keep up the good work.
I'm amazed at the number of people who study finance and never invest in anything.
Its because they are the ones selling the crap. Things like collaterzlized debt MBS or 100 year bonds from Argentina or Tesla Motors shares and bonds. LOL
Sven, I recently conducted an experiment over 6 months where I managed my own portfolio and compared my personal returns with those of a mutual fund my financial adviser put me in several years ago. Factoring fees and other expenses, the mutual fund had a 6% annualized return on investment. My own portfolio's returns were *much* higher. I acted on several of your recommendations as well as my own picks which I researched using the framework provided by Phil Town. Long story short, I fired my financial adviser, sold my mutual funds, and transferred the cash into my own personal account. Thank you for your videos -- especially the ones where you analyze individual stocks.
Hi! 6 months is a really short period of time when investing:-) You should run another experiment, make a virtual portfolio and try to do the opposite, try to lose money on purpose, if you manage to make money on your portfolio and lose on the other, then you system works :-) And, of course, on a longer time frame.
But, I am happy to hear you had higher returns, a bit of common sense will always beat the market!
we are in the wrong time to invest in index funds and mutual funds.... every 5th ad on TV in my country is mutual fund!!! stock market is also at its highest ever and stock market agents shows last 5 yr performance!!! Commodity investment/value is out of favor.... thus undervalued.... thus the opportunity. This is why I am a huge fan and aspiring to learn from 'Invest with Sven Carlin' :)
So Commodity stocks should be taken a look at? I just heard that Yesterday. Which Commodities?
Old video but with an opinion that today is almost forbidden to express. Good thing we have old videos of you Sven.
Hey Sven I got to tell you thanks. I sold my index funds and ended up buying 50 shares of JP and some other stocks but just with JP alone I've made $529.5 today. I would have never bought JP if it wasn't for your videos. Thanks
This is one of your best videos which you should use as a buyer beware clause when promoting your courses.
thanks!
Not only one of your best videos, but one of the best investing videos on you tube! Keep up the great work! 👏
Thanks!
Thank you for your great input. Your video's have always been very helpful. Keep up the great work!
Investing means to be on the correct side of some notion of fair value. If overpaying and expecting a price to go higher, that's not investing but gambling.
Sir thank you for this amazing video and for sharing your expertise. I'm just a beginner and you're a massive wealth of knowledge to me
"how will my financial life be affected" "How will it affect my wellbeing" .. Great questions Sven, almost preparing us emotionally for what could come, thank you for caring
People think only about now when they think about risk but they should think about risk from a long term perspective. Unfortunately, most never learn and we can buy cheap stocks in panics.
Thank you for talking me out of mindless ETFs.
Hey Sven, youre data is a bit skewed, u disregarded dividends. Another thing to keep in mind is that before 1970 there was a deflationary currency namely gold which increased in price, meaning that the actual value of the stocks did actually go up, its just that the increase in goldprice would offset the appreciation. I believe I've red that on average gold increased by around 6% a year on average before fiat currencies were introduced. So say you would have an average of 2% dividends (which seems low especially before tech companies paying hardly any dividend started to take over the markets) you would have an average return of 8%, which is rater in line with the 7% you mentioned. If I'm wrong I would love for someone to correct me.
Appreciate your honest explanation. We need more teachers like you. Thanks
I appreciate that!
I am not man of a big words, just want to say... thank you, thank you, thank you
Thank you! Those are big words!
Good evening Sven,
how much quality of content can you find in your past videos?
A huge amount !!!
This is a spectacular video that everyone should watch and re-watch carefully!
thanks!
Thanks for this great video Sven - really opened my eyes on index funds as I thought that was the best way for quite a while. Please keep on doing your amazing work (backtracking to your older videos as I am quite new to your channel)
Thanks Jon! Enjoy the videos:-)
The index MSCI AC World grew only 25% compared to OCT07 (prior 10 y.). I think a big disadvantage is that indexfunds fall very deep and take a lot of time to recover. They run in every bubble (2000: IT, 2007: financial, x: technology).
This is one of the best overall video Sven has made.
I did not want to watch it because the title seemed too gimmicky. I am glad I just watched it.
Thanks!
the reciprocal view is this,,, if you didn't invest in stocks for the 78 year , 30 year mark your money would have lost money due to inflation,, if (for me) investing in stocks keeps up with inflation atleast one is losing buying power,,
this is a great informative video
I totally agree with your way of thinking about ETFs and the small lines in between that most people are not aware of. In the last years there is a lot of promotion of the ETFs investing even from RUclips and channels that have nothing to do with investing, making it seem like a sure, automatic and harmless way to invest your money. But on the other hand I have an objection. I think that the believe that anyone can do it by itself is a fallacy. I am not an accomplished investor like yourself, I have little experience and still learning a lot every day (also from you:)) but talking with a lot of people, friends and relatives(some of them also investing) I can clearly say that most people are not capable to invest themselves. Not because of lack of mental ability but because of underestimating the learning and risk that is associated with it and not taking the time to learn. Probably other priorities...
Thank you for another great video.
TheMpamMpam
I think there are three keys for success: high saving rate, learn about investing, emotional stability in difficult times
Well said and I agree but in reality most people fall short of doing one or all three of them!
The main problem is that people don't understand the risk reward of their investments and unfortunately the quality of their life depends on it. If you don't understand it, better be in cash.
At this point (globally) - I think Cash is the King. Warren Buffet has 100 billion cash. Keeping even 50% level in cash won't be a bad idea because inflation levels are still too low to erode $ buying power.
At the end is all about diversification and in this environment I would tell everybody to listen to Dalio and go for all-weather portfolios.
Amazing advise for everyone starting investing!
Thank you so much. Nobody is like you.
Thank you!
a real eye opener ! things look a hell of a lot different when we zoom out !
:-)
1. at 4.43 why did you use house price index instead of snp?
2. What if you factor in dividend returns for holding stock, would it paint a nicer picture?
3. at 5.57 post ww1 gains, where does the high return of the global portfolio come from? Where can I have a look at the global returns?
4. where would u advise we park our money then.
thank you kindly for the information and responding to subscriber comments. it cant be easy offering investment advice on youtube, i commend your dedication!
Hi there. I used the housing index just for fund and not to use the S&P 500 index all the time. However it shows the same point.
2. Yes, dividends add 4% over the long term in annual returns but giving that the current dividend is below 2% the signficance of that is much lower now.
3. Try the MSCI indexes.
4. I don't give individual advice, my goal is fore everybody to reach enough financial knowledge to make good investment decisions based on own risk reward appetite.
I appreciate you Sven
Thanks!
this is such incredible important information! what an eye opener!
Glad it was helpful!
Sven, thank you for this very informative video. Your content is always top-notch!!!
NO INDEX FUNDS FOR ME! I have been sharing your videos with people I meet that have questions about investing!
Thank you for your support!
Or only high dividend ETF
Hm, again my problem with ETFs, they will buy the best dividend yielder, but who knows if the dividend is growing or in a bad sector.
This should be required viewing.
thanks!
Having this conversation with retail investors encounters cognitive dissonance, recency bias, status quo, and recency biases. No wonder retail is labeled "dumb money". The rise in retail investors amid the decline in defined benefit plans over the same 35 yr period indicates a historucally high proportion of U.S. investors represent dumb money. I gave up trying to convince friends and family. Their bias is my gain. :)
Unfortunately that is how it works. But imagine a better world where we all get dividend yields of 10% and inflation is just at 2%, wouldn't it be better?
This video should be mandatory viewing for Jeremy Siegel, author of "Stocks for the Long Run."
haha, the funny thing is that the book was published in 1994, it has yet to see an opposite trend in interest rates :-) We will see if it will be so famous if interest rates rise for 20 years :-)
I think there are only 2 ways to invest for an average investor in future: dividend strategy with good companies (buy and hold) or stock picking with concentrated portfolio which is riskier. As you mentioned index funds can decrease by more than 50 percent. So I prefer companies of defensive sectors that have a low beta, longterm business model and growing dividends.
remember that in your lifetime everything you own will probably decrease more than 50% at least twice, even the defensive stocks as those depend on interest rates. Nevertheless, much better than owning the S&P 500
I agree with your views on index funds, and what happened to the Nikkie is mostly what keeps me from investing in them. What I'd like to ask is how you view dividend paying stocks, particularly ones focused on dividend growth investing as my portfolio is currently built to focus on a dividend income strategy such that even if the principle ends up being flat for the foreseeable future, the income generated by the dividend will be enough to allow the stocks to sit. It's a mix of growth/value dividend stocks, higher yield dividend payers (such as BDCs and REITS), Aristocrats, and things like T which I consider as a bond substitute.
I also agree with you that it's shocking how many people don't take the time to learn about their financial well being.
Hi Demagogue, there is no difference in how the stock pays out the earnings, be it dividends, increased book value or buybacks, well, there is a small difference in cost, buybacks are ok if they are at below book value, dividends unfortunately get taxed again, so the best things is earnings but people don't understand that, Buffett paid only once a dividend of $0.1 and thy tricked him into it :-)
I think you may have misunderstood the question, it was less about how the payout works and more about how certain types of strategies work during market periods. In that dividend stocks function better during both recessions and flat periods.
I have not yet seen data that tells me that. Dividends get often cut in recessions and stocks hammered. So, it is all about what you hold. Generalizing about dividend strategies against others is too vague. Some people love dividends, some don't. I have both in my portfolio but would hold the stocks even if the situation was opposite and those wouldn't pay a dividend at all.
Awesome share Sven!!! Many thanks!!!
Hi Sven, I'm probably just restating the obvious, but it seems to me that those periods of negative returns are periods to invest, and the periods of positive returns would be periods to either sell, or rest on your laurels and collect dividends. I don't really see volatility as a negative.
at the end, it is always time to invest in good things:-)
What about if we consider dollar cost averaging and dividend income?
The dividend is below 2% and dollar cost averaging would work for those who start investing now. Those who already have built a portfolio now look at it from a different perspective. Nevertheless, DCA and dividends are a much better strategy than plain index funds.
That is relieving! Thank you. Nonetheless, excellent video. Subscribed
Sven, I truly believe the Dow will soar to levels between 40-50k within the next 4-5 years. But, it will be at these levels that investors come to the realization that the market (Dow) is not real. And it will be at this capitulation point that investors will run into hard assets. This is where PM's prices will go ballistic. My only hope is that government's don't come after private citizen's gold and silver.
That is definitely a possibility, I am not excluding anything at this moment. I try to prepare myself for anything. The government won't come after you gold, hopefully!
Sven, what do you recommend to people with no big expertise in the stock markets. Why is indexing (with relatively low costs) not an alternative? The timing approach is for most people not profitable, that even show the weak long-term performance of hedge-funds and active managed funds.
.
no time and not knowledge, just buy Berkshire!
Hey Sven, is that really fair to consider inflation adjusted returns when the alternative is to hold cash forever waiting for stocks to crash? I wanted to start investing in the stock market and already had a plan but after I started watching your videos I have no clue anymore.
If you have no clue means that there is more to learn:-) However, the best learning is done by doing, so start, learn, you might lose, you might win, if you constantly learn, you will find what works for you and do well over time, that is the key: over time.
Sven thanks for the vid's I appreciate the insight. I retired in 2012 and in 2013 put 25% of my portfolio into non correlated investments. I have Business Development Stocks for dividends they throw off and some mutual funds that are growth and value plus some blue chips. I know from investing since 1980 that the market will take almost everything down. I know I need to re-balance and take my lumps paying taxes but where do I put funds that have less risk? Bonds as the interest rates rise is not a good solution thus to me commodities seem the best call for less down side but also less upside. Your thoughts? Oh and I watched some REITs I owned also tumble. Thanks again for the education.
short term bonds for security, other that that there is not much in this market - some merger arbitrage etc but that is more sophisticated and risky.
But it clearly has gone up on the whole if you waited at any of those points
Excellent!
Thank u For very informative
Oh... this is why I need bonds in my portfolio.
hm, that could be a long story:-)
"The best estimate for the S&P500 in the next 40 years is just 4%". May I ask you how did you reach to this conclusion? I am interested to understand please becase i am fully invested in index funds for the past 11 years and i can find very few actively managed fund that beat a 2 etf portfolio net fees and inflation !
from valuations and where we are in the cycle
Do you offer personal financial advice on how to get started investing? Love your videos, but I’m just starting to investigate all of this
Just keep learning and read as many books as you can. i will be preparing a few courses in the future which will be very helpful.
Do you like DRIP/reinvest with dividends or do you like to get paid out in cash?
I am not form the U.S. and thus DRIP doesn't apply to me. As I constantly rebalance my risk a DRIP investment strategy can't be applied. Also I am not focused on dividends, it doesn't matter to me in what way the returns come, capital appreciation, increased book value, dividends.
thanks so much for your wisdom! i got the alchemy of finance per your recommendation -- cant wait to get into it!
Can we still earn money with index funds using a mixed allocation of assets? I strongly disagree with the idea of educating myself and increase return by investing in individual stocks, cause I don't feel it worth the hassle. I want to be a Pareto maximalist and a passive investor. Please help with your valuable advice, Sir!
Sticking to Pareto, it worked well over the last 100 years when the average dividend yield was 5% and inflation 3%.Given that now the inflation is 2% and dividend yield 1.8%, it might be the 20% of bad years ahead for the index fund investors:-) Sorry, I really believe that is too much risk for little return, if any.
Buy real estate, or BRK:-) That is an index fund
@@Value-Investing Yeah, I'm keeping 50% of my cash in short term government bonds waiting for a correction on real estate but I'm wondering what to do with the other half.
Robert Kiyosaki says that cash is trash and money have to flow because the currency loses value. On the other hand, right now there is a huge stock bubble which might eventually burst.
I was thinking maybe to keep my cash to wait for the big deleveraging that might come and buy S&P 500 with 70% discount. But what will happen with my cash, won't it also devalue with significant amount before the market crash happens?
I feel I'm stuck in a lose-lose scenario and I'm the loser Kiyosaki is saying when he refers to savers. At least consumers don't have any money but also no decrease in capital gains from inflation. I have lost 5% of my equity in the last couple of years only from inflation. Is horrible!
What is BRK btw? Wayne Buffet's index fund?
@@Value-Investing I mean, I don't know, I do not want to be an active investor. Is it safer/better to just stay on cash and wait for a big market crash either on real estate or stocks?
And if the crash happens with a 50% decrease in stocks, should I massively buy stocks with 80% of my budget or something like that or still keep an All Weather approach despite the low price of assets?
U are the best
I've been watching your videos and find them very insightful. Not sure if you invest in healthcare stocks, but have you heard of APHB? If so what do you think of it? They got EU approval for a drug recently and are currently working towards getting an FDA approval.
Hi, thanks for watching. Pharma stocks are really not my circle of competence :-(
Please analyse SAND & MUX. Great channel!
I did MUX already, just look through my videos.
Invest with Sven Carlin, Ph.D. looking... thx!
What about people managed fund? For ex, BG America fund? They fall 8% in 2008,and increased 9% in 2009. Is it a better choice to buy fund?
I don't know much about such funds, sorry!
Invest with Sven Carlin, Ph.D. Thanks for replying me, do you think “people managed fund “ is better than index fund for current market situation?
If you have time please take a look at AAOI as soon as possible.THX
Will do but as I see it now, there is not rush :-)
Here is my answer to the same question. Do we have any kind of visibility into their future sales? Do we know who will be the seller of 100G to amazon? Do we know if margins will get squeezed in the future? Do we know if the management is trustworthy?
Does the company have a moat? All depends on one customer, AMZN with 55% revenue.
I have no idea where could this go. For this you need a crystal ball.
Thx for taking the time to look at it. I also did a bit of research in the last days and the most striking finding was exactly that, Amazon and then Microsoft and Cisco in lesser extend comprise for the bulk of the revenue. They have no debt and still making money and in case Amazon continues to buy the 100G it can really triple. But that is the problem, it is blind risk at the moment. After your assessment I feel much more sure. Thx
Nest target $58 use trailing stop and ride it
Are dividends included?
Amazing
Your video was actually shortly mentioned in podcast by Nordnet (finnish). They said that you must have used graph data without dividends. Was that only price index with long periods of no return?
What index do you mean? Yes, dividend would increase the returns but given that dividends are extremely low now is kinda evens out.
He picked worst case scenario for lump-sum investing. And many companies remain profitable even if their stock is down so yes, dividends can make up for around 3-5% typically. If nothing else, let's say 4% dividend with an inflation of around 3% historically still yields 1% per year in worst case.
6:30 Austria is even negative
This video I like.
alleluja, at least one!
But in longterm the stock market has to go up because of inflation rate (around 2 percent), right?
Who told you that?
It's an assumption. There need to be inflation to get higher stock prices in longterm. Would be interesting to know what do you think what the reason is.
Hm, that all depends on valuations and interest rates. Doesn't have to be so, videos coming up.
8:00 the austrian stock market seems to be excessively bad.
my question how to invest in silver with out etfs , physical or miners
miners can be extremely dangerous , etfs fees every year , physical a lot of headache
I don't know:-) Royalty streaming company - set one up
We are on the verge of the longest stretch without a 3% or 5% pullback. I wonder if there is a resource where I can find what happens after record UP moves without correction in stock markets?
Major central banks are pumping TRILLIONS of $s (every year into the stocks & bonds). Maybe the stock market will go up & never come down.
In Italy you have a saying, chi vivra Vedra, who will live will see :-)
Sven, are u starting a revolution here 😆 ?
That would be great!
If you have 2 million and pay 2% fees per year that is 40 k per year. If you keep it there 10 years you have dumped out 400k dollars! Basically you have flushed that money down the toilet.
Dividends included ?
I don't know how did they calculate it but no difference as the stock market returns 5 percentage points higher were also without dividends.
Hi Sven!!!! Thank you for info!!!! What do you think about SQM??? Seems like a nice comp to ride
Hi, I analyzed SQM in depth when the price was at $18, hoped it would fall down to $13 so that I can buy. It didn't :-) As I didn't buy at $18 I am definitely not going to buy at $60. perhaps I am wrong but what can I do :-) As for the stock I think it is booming on the increased metal prices and lithium potential. Long term earnings should be calculated to estimate a fair value.
Your data table showing "What was the worst that could have happened?" seems a bit funcky to me. Certainly the 30-year, 40-year, 50-year columns on the far right. Let's take Austria, France, Germany (last column) at -99.1, -61.5, -88.5 for example. What's the source for this data table? I would take it with a grain of salt. I understand the message you're trying to pass with this video but i doubt the actual data is correct. Prove me otherwise pls. Also, please don't take the shortcut to simply ignore dividends. They are an important part of returns on the long run. I know that you are looking at 'inflation-adjusted' returns here but for most people, they don't understand the difference with their total portfolio returns. In fact, for many people, investing in the stock market and have a return better or equal to the inflation rate (keeping the purchasing power of their money) would actually be a good goal. I know too many people keeping huge amounts of cash on their (savings) accounts & losing money every day... still I enjoyed your video and congratulate you on your education work. But please, link to the data-source in your video description so that we can challenge/check the validity of these data. Keep up the good work, cheers, Hubert.
Of course, the data is skewed by hyperinflation in Germany and the two wars where if you invested in Austria in 1914 the 50 year returns wouldn't be great ;-) I just have the chart from a London school of economics presentation, as soon as I find the article I'll put the link.
As for the investing part, I am just saying that people should not invest blindly in index funds, with a bit of common sense I think it is much easier to find better investments (lower risk/higher return.
As for the dividend, you are right, it has been a huge part of returns in the past but now it is much much lower. This is not excuse to take things lightly but nevertheless.
Return to the mean. And mean this popping of the bubble will be. Rigged casino presently.
Grumpy Belly cat
What about the Israeli market?
there are some great companies in Israel but I am not that familiar with the market.
Sorry, but picking out the worst possible start and end is just as much cherry-picking as what marketers do picking the the time periods with the steepest increases. Almost nobody invests a big lump of money all at once and doesn't do anything for the next 30-50 years. Most people invest a more or less steady part of their income every month or year. Having stock prices go into a deep valley between your start and end point is the best thing that can happen - provided you stick to investing regularly. And for this it doesn't really matter whether you invest in index funds or individual stocks.
Hi Sven, this is really interesting, but also a bit scary. I have checked it for the DOW. You show a linear chart of the S&P500. For long-term we should use only the Log-Chart, to see the returns in the slope of the graph in all years. From 1940 to 1997 the return in the DOW was in average (!) similar to the return from 1997 until today. 1966 to 1982 the DOW was in a long bear-market. The next bear-market was from 2000 to 2013. 1929 to 1954 was an extreme. We hopefully never see a "great depression" again! And during these bear markets we still get a Dividend. And hopefully we get something from bonds or Gold is giving some return.
IMO the end of Bretton Woods marked an important change in the monetary systems worldwide. And of course the long-term falling interest rates are a reason for the steeper increase of stock prices (and all assets) since 1980. And the expected return for the next 8 to 10 years in stocks is negative... d'accord!
.
I don't like logs:-(