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Just a general comment about your channel. It is my favourite financial youtube channel. Because of Ramin's personality. I have never seen a public person with such a brilliant combination of knowledge, great teaching skills (explaining things in a simple, understandable way) and an all round pleasant, trustworthy, helpful, humble personality. Truly brilliant stuff. You are the best. Thank you. I hope that my 5 year old twin girls start watching your channel one day. I posted this comment on an older video the other day. Felt it was worth it to repeat the praise in a fresh video. This channel should be top of the list for anyone interested in investing. By the way, I agree on the message here. 85% of fund managers can't beat the market. That number says it all. Competition is fierce. And it is stupid and narcissistic if we think that we are the exception. Smart value investing sort of ETF picking is the way to go IMO. Personally I currently hold ETF's (mostly index funds) in Singapore, South Korea, Taiwan, India and Russia.
Big respect for taking the time to share your considerable knowledge and expertise on all your output. What an articulate and likeable guy you are. Thank you.
I have a very small portion of my portfolio (under 5%) stocks for 'fun' tends to act as more of a source of stress for me. I definitely prove this rule. I am up still, however that is mostly due to the general performance of markets. I've missed out on a lot of gains from getting out to early, and made losses from getting out to late. Very happy when I first started investing a few years ago now I took your advice, the rest of my money is in index funds. Thank you!
I have used a combination of Stockopedia, Sharepad, Investors’ Chronicle (Simon Thompson & Phil Oakley) and Small Company Sharewatch for the last decade. Returns have been better than good.
Just discovered this channel - refreshingly clear and well grounded. The only other channel I have seen that comes close is Ben Felix's Common Sense Investing, which is tailored to the Canadian investor, so I'm delighted to have found something closer to home for a UK investor. A question for you on the implications of Bessembinder's analysis. One strategy is to buy the whole market to make sure you capture the few stocks that deliver most of the returns. Another is to find a manager who can identify those "moonshot" high return stocks - and who doesn't charge you the moon for his services. Both of these strategies are well covered in this video. But I wonder if there is a third strategy - find a manager who can reliably cut off the very long tail of losing stocks. That manager's concentrated portfolio may not contain any of the moonshot stocks, but just by avoiding the more than 50% of stocks that have negative returns surely there is a good chance of beating the market average? Isn't that essentially what Terry Smith and Nick Train claim to do, for example? I would be interested to hear your thoughts on that.
Great video. Love to see the stats and analysis you provide every time. It's also nice to watch a channel where the host is not yelling "Let's Go!" Haha.
I bought your book, "A Financial Bestiary". Looking forward to seeing the Amazon delivery guy! Thanks for all the great content, and please keep it up Ramin!
Almost no company survives over a long period of time like 30 years so one must look to “buy and hold” over a much shorter period of time like 3-5 years to be a successful stock picker.
Outstanding video and as usually rational as hell. I am convinced to buy the whole haystack instead of trying to find the needle! For index funds eg VOO or VT/VTI, are there equivalent ones that accumulate instead of distributing dividends as dividends are taxed... thanks Ramin. Looking fwd to your next video.
Hi S C Huang thank you! If you hold a Vanguard US brokerage account this seems to be possible e.g. see investor.vanguard.com/investing/brokerage-dividend-reinvestment There's more on the US tax treatment of dividends from Fidelity www.fidelity.com/viewpoints/active-investor/etf-myths scoot to the section "Are all ETFs tax-efficient?". Thanks, Ramin
Tnx @@christophdenner8878 it was my impression as well. If that's the case I think this gives an unfair disadvantage to equity when comparing up against CDs.
Great videos.........You did one a couple of years ago about "Can Fundsmith continue to outperform" which you didn't believe they could. Has your opinion changed at all ? Because so far (touch wood and fingers crossed) it has continued to give a very healthy return. Maybe he really is the British Warren Buffet ?
Hi P W3 I looked at their recent performance and it hasn't been that great e.g. for the last four quarters the performance relative to SWDA (MSCI World in sterling) has been -3.2%, -3.5%, +4.2%, 1.2%. My opinion is that Fundsmith is a good fund manager but their fee is very high and most people are better off avoiding star managers because at some point star performance usually fades. Thanks, Ramin.
Hi @Aziz 99 I always give the source at the bottom right hand of the slide if i'm quoting someone else's work . Some of the graphs I produce myself from data I get from a variety of sources. Thank you for watching! Ramin
Great video. I have FOMO on the market returns. Even underperforming the market by 1 or 2% leads to massive long term opportunity cost. I believe investing time in growing income will yield far better returns than stock picking.
Good video Ramin - market weighted indices such as S & P 500 will inevitably include big companies once they become successful and profitable; however if an active manager can identify a successful company before it reaches that stage - or just before inclusion in the S & P 500 - then almost by definition they are likely to outperform that market weighted index Bessembinder's research is interesting, but rather misses the point as all successful companies go through a life cycle S curve; owning a passive fund is a very effective way of investing in the market as it is low on cost and low on time taken. I agree that the stats on active fund managers beating the index are not encouraging for active fund managers, but there are some funds that have consistently beaten the index
So could you name a couple of funds that have beaten say vanguards S&P 500 etf over say 15 years?.........I’m being mean Warren Buffet made a million dollar bet with an active fund manager to pick any active fund to beat the S&P 500. Buffet has already collected his winnings no active managers have beaten the S&P500 over 15 years.
@@sid35gb I don't have data going back that far - using Yahoo and HL; Fundsmith TR from 1 November 2010 (inception) to 30 April 2021 is 488% - S & P 500 is 315%, Nasdaq is well ahead of S & P 500 over last 10 years and SMT even more so; so it is possible to beat the S & P 500; saying very few fund managers beat the S & P over long time periods is true, but that is as much a function of the life cycle of fund managers, and how many manage the same fund in the same way for the same fund management company over that length of time as a statement about whether or not it is possible to beat the index As I say, if you want to avoid the hassle and risk of selecting an active fund manager, fine - buy an index; but don't use statistics to dismiss active fund management without checking out the detail.
@@nicholask5078 I would suggest you google up Warren Buffet million dollar bet. Active management will sometimes beat passive investment in the short term but always deduct the fees before making the comparison because you tend to find that the returns end up being the same as the index net of fees.
@@sid35gb I am well aware of the bet; Buffett's bet was that no investment pro could select in advance a set of at least 5 hedge funds that would over an extended period - ten years - match the S & P 500; note that Buffett was particularly targeting hedge funds, which typically have a management fee of 2% and performance fee of 20%, because he regards these fees as too high for the performance I don't pretend to be able to tell you which funds will do well for 10 years - but I can, and have, identify funds that are likely to do well over the next 6 months, which is all I am asking; so my investment return over the last 12 months is well ahead of the S & P 500; can I guarantee I will continue to out perform it - no of course not Also bear in mind that passive funds carry their own risks; as more and more money is put into a passive fund such as the S & P 500, valuations are driven higher and higher and further away from any realistic valuation based on discounted earnings; which is what we are seeing now Historically very low interest rates and huge sums of COVID support money are supporting the market - and will likely continue to do so for several years however when there is some event that precipitates investors starting to sell, the process goes into reverse and so you will have huge outflows and a collapse in share prices; hedge funds are designed to mitigate that risk and take advantage of that collapse in market indices. If there was a stock market crash a hedge fund would likely come out ahead of the S & P 500. I suggest you google Ted Seides article that explains why he lost the bet - and the lessons he draws from it - and that one reason why Buffett won was because there was no major crash during the ten year period from 1 Jan 2008 through today SPY is up 184 %, SMT is up 727%, QQQ up 523%; both these funds were well ahead after ten years as well - 82%, 242% and 231% so it is possible to beat the S & P 500 over 10 years; could I have predicted in Jan 2008 that SMT and QQQ would out perform over the next ten years - no; SMT's recent huge outperformance in 2020 is due mainly to the impact on the investment world of COVID - did I invest in SMT during that period - yes; have I switched my position since February when it peaked out - yes All I am saying is that active management can do better than the indices and that passive investment carries its own risks
The same problem is present in crypto. The best by far though is Elrond eGLD, which has phenomenal growth potential and a healthy rate of interest for stakers.
Here is another lesser known fact: most passive investors underperform their own benchmark. For the same reasons as active managers underperform their benchmark.
Vanguard offers a global small cap if I remember correctly, perhaps it offers some other market specific ones as well. Also we should report the the account pretending to be pension craft
These stats make picking individual stocks sound more grim than it really is. This kind of investing is very misunderstood. If you just want to put your life saving somewhere and wait by the mailbox for your wealth to come than even an S&P 500 index fund is very risky b/c you're just gambling. But, if you're willing to learn successful investing strategies, you have a much better shot. You could focus on an industry you're relatively familiar with and find some promising small caps with great growth potential. Small caps are more likely to be overlooked by Wall Street b/c no one has ever been fired for advising to invest in AT&T and few people have the stomach for taking on Cathy Woods kind of risk. But if you work as a nurse (for example) and you see a new drug being prescribed often to help a common medical issue (like migraines, allergies, back pain - you name it), you might research the company and find decent financials, a protective patent, lots of insider buying and other good signs. If you read their annual report, you may see more promise. Not saying there is no risk, but it could be a 20 bagger and that's very different than investing in something Jim Cramer advised to millions of people and is likely overbought by the time it's all over the media. Just saying stats don't tell the whole story. Good day, folks!
Perfect notebook to scribble your thoughts on current market conditions, plans or strategies! Keep track on your past trades, write down all your learnings about different aspects of the economy and plan your next investments @t
Become a PensionCraft Patreon member and gain access to a library of exclusive videos and content, chat with me and other members on our chat forum and take part members-only live Q&As. patreon.com/pensioncraft
Support us on RUclips and help us remain independent ruclips.net/user/pensioncraftjoin
Best financial educator on RUclips! Fresh air in a climate of hysteria and click baits. Keep up the great work, ramen!
Just a general comment about your channel. It is my favourite financial youtube channel. Because of Ramin's personality. I have never seen a public person with such a brilliant combination of knowledge, great teaching skills (explaining things in a simple, understandable way) and an all round pleasant, trustworthy, helpful, humble personality. Truly brilliant stuff. You are the best. Thank you. I hope that my 5 year old twin girls start watching your channel one day.
I posted this comment on an older video the other day. Felt it was worth it to repeat the praise in a fresh video. This channel should be top of the list for anyone interested in investing.
By the way, I agree on the message here. 85% of fund managers can't beat the market. That number says it all. Competition is fierce. And it is stupid and narcissistic if we think that we are the exception. Smart value investing sort of ETF picking is the way to go IMO. Personally I currently hold ETF's (mostly index funds) in Singapore, South Korea, Taiwan, India and Russia.
Agreed, Ramin is a superb communicator. He doesn't underestimate his audience and he clarifies technical issues without oversimplifying.
Well said Dan, couldn't agree more. We need to support intelligent and thoughtful voices such as Ramin on RUclips.
Big respect for taking the time to share your considerable knowledge and expertise on all your output. What an articulate and likeable guy you are. Thank you.
I have a very small portion of my portfolio (under 5%) stocks for 'fun' tends to act as more of a source of stress for me. I definitely prove this rule. I am up still, however that is mostly due to the general performance of markets. I've missed out on a lot of gains from getting out to early, and made losses from getting out to late. Very happy when I first started investing a few years ago now I took your advice, the rest of my money is in index funds. Thank you!
I have used a combination of Stockopedia, Sharepad, Investors’ Chronicle (Simon Thompson & Phil Oakley) and Small Company Sharewatch for the last decade. Returns have been better than good.
Just discovered this channel - refreshingly clear and well grounded. The only other channel I have seen that comes close is Ben Felix's Common Sense Investing, which is tailored to the Canadian investor, so I'm delighted to have found something closer to home for a UK investor.
A question for you on the implications of Bessembinder's analysis. One strategy is to buy the whole market to make sure you capture the few stocks that deliver most of the returns. Another is to find a manager who can identify those "moonshot" high return stocks - and who doesn't charge you the moon for his services. Both of these strategies are well covered in this video. But I wonder if there is a third strategy - find a manager who can reliably cut off the very long tail of losing stocks. That manager's concentrated portfolio may not contain any of the moonshot stocks, but just by avoiding the more than 50% of stocks that have negative returns surely there is a good chance of beating the market average? Isn't that essentially what Terry Smith and Nick Train claim to do, for example? I would be interested to hear your thoughts on that.
Great video. Love to see the stats and analysis you provide every time.
It's also nice to watch a channel where the host is not yelling "Let's Go!" Haha.
I bought your book, "A Financial Bestiary". Looking forward to seeing the Amazon delivery guy! Thanks for all the great content, and please keep it up Ramin!
Thanks @Guillaume Pelletier I hope you enjoy it! Ramin
An outstanding summary. Essential viewing.
succinct. to the point. great explanation of "modern portfolio theory."
Fantastic analysis . Tells investors what most fund managers don’t want them to know . Kinda makes the case for passive investing in an Index.
Almost no company survives over a long period of time like 30 years so one must look to “buy and hold” over a much shorter period of time like 3-5 years to be a successful stock picker.
Really useful, there is a lot of research to back this up. Index trackers were founded based on this, although arguments can be made against them too
Outstanding video and as usually rational as hell. I am convinced to buy the whole haystack instead of trying to find the needle! For index funds eg VOO or VT/VTI, are there equivalent ones that accumulate instead of distributing dividends as dividends are taxed... thanks Ramin. Looking fwd to your next video.
Hi S C Huang thank you! If you hold a Vanguard US brokerage account this seems to be possible e.g. see investor.vanguard.com/investing/brokerage-dividend-reinvestment There's more on the US tax treatment of dividends from Fidelity www.fidelity.com/viewpoints/active-investor/etf-myths scoot to the section "Are all ETFs tax-efficient?". Thanks, Ramin
As they say, diversification is the only free-lunch in investing :)
Great video
Do the performance as viewed i.e. Deutche Bank include accumulated dividend?
No, I think it did not. This was just stock price appreciation (or depreciation, to be precise...).
Tnx @@christophdenner8878 it was my impression as well. If that's the case I think this gives an unfair disadvantage to equity when comparing up against CDs.
Your advice is detailed and top quality keep it up
Thanks, will do!
Hum, whats about when mega-caps get overvaluated?
Great videos.........You did one a couple of years ago about "Can Fundsmith continue to outperform" which you didn't believe they could. Has your opinion changed at all ? Because so far (touch wood and fingers crossed) it has continued to give a very healthy return. Maybe he really is the British Warren Buffet ?
Hi P W3 I looked at their recent performance and it hasn't been that great e.g. for the last four quarters the performance relative to SWDA (MSCI World in sterling) has been -3.2%, -3.5%, +4.2%, 1.2%. My opinion is that Fundsmith is a good fund manager but their fee is very high and most people are better off avoiding star managers because at some point star performance usually fades. Thanks, Ramin.
Woow! The sources you use are brilliant!
Can I know How do you find them?
Hi @Aziz 99 I always give the source at the bottom right hand of the slide if i'm quoting someone else's work . Some of the graphs I produce myself from data I get from a variety of sources. Thank you for watching! Ramin
Great video. I have FOMO on the market returns. Even underperforming the market by 1 or 2% leads to massive long term opportunity cost. I believe investing time in growing income will yield far better returns than stock picking.
Please review Stockopedia!
I get it, so what you're saying is that stocks just go up
Thank you, love the channel 👍
Glad you enjoy it @Knowledge77
Good video Ramin - market weighted indices such as S & P 500 will inevitably include big companies once they become successful and profitable; however if an active manager can identify a successful company before it reaches that stage - or just before inclusion in the S & P 500 - then almost by definition they are likely to outperform that market weighted index
Bessembinder's research is interesting, but rather misses the point as all successful companies go through a life cycle S curve; owning a passive fund is a very effective way of investing in the market as it is low on cost and low on time taken. I agree that the stats on active fund managers beating the index are not encouraging for active fund managers, but there are some funds that have consistently beaten the index
So could you name a couple of funds that have beaten say vanguards S&P 500 etf over say 15 years?.........I’m being mean Warren Buffet made a million dollar bet with an active fund manager to pick any active fund to beat the S&P 500. Buffet has already collected his winnings no active managers have beaten the S&P500 over 15 years.
IF
@@sid35gb I don't have data going back that far - using Yahoo and HL;
Fundsmith TR from 1 November 2010 (inception) to 30 April 2021 is 488% - S & P 500 is 315%,
Nasdaq is well ahead of S & P 500 over last 10 years and SMT even more so;
so it is possible to beat the S & P 500;
saying very few fund managers beat the S & P over long time periods is true, but that is as much a function of the life cycle of fund managers, and how many manage the same fund in the same way for the same fund management company over that length of time as a statement about whether or not it is possible to beat the index
As I say, if you want to avoid the hassle and risk of selecting an active fund manager, fine - buy an index; but don't use statistics to dismiss active fund management without checking out the detail.
@@nicholask5078 I would suggest you google up Warren Buffet million dollar bet. Active management will sometimes beat passive investment in the short term but always deduct the fees before making the comparison because you tend to find that the returns end up being the same as the index net of fees.
@@sid35gb I am well aware of the bet; Buffett's bet was that no investment pro could select in advance a set of at least 5 hedge funds that would over an extended period - ten years - match the S & P 500; note that Buffett was particularly targeting hedge funds, which typically have a management fee of 2% and performance fee of 20%, because he regards these fees as too high for the performance
I don't pretend to be able to tell you which funds will do well for 10 years - but I can, and have, identify funds that are likely to do well over the next 6 months, which is all I am asking; so my investment return over the last 12 months is well ahead of the S & P 500; can I guarantee I will continue to out perform it - no of course not
Also bear in mind that passive funds carry their own risks; as more and more money is put into a passive fund such as the S & P 500, valuations are driven higher and higher and further away from any realistic valuation based on discounted earnings; which is what we are seeing now
Historically very low interest rates and huge sums of COVID support money are supporting the market - and will likely continue to do so for several years
however when there is some event that precipitates investors starting to sell, the process goes into reverse and so you will have huge outflows and a collapse in share prices; hedge funds are designed to mitigate that risk and take advantage of that collapse in market indices. If there was a stock market crash a hedge fund would likely come out ahead of the S & P 500. I suggest you google Ted Seides article that explains why he lost the bet - and the lessons he draws from it - and that one reason why Buffett won was because there was no major crash during the ten year period
from 1 Jan 2008 through today SPY is up 184 %, SMT is up 727%, QQQ up 523%; both these funds were well ahead after ten years as well - 82%, 242% and 231% so it is possible to beat the S & P 500 over 10 years; could I have predicted in Jan 2008 that SMT and QQQ would out perform over the next ten years - no; SMT's recent huge outperformance in 2020 is due mainly to the impact on the investment world of COVID - did I invest in SMT during that period - yes; have I switched my position since February when it peaked out - yes
All I am saying is that active management can do better than the indices and that passive investment carries its own risks
The same problem is present in crypto. The best by far though is Elrond eGLD, which has phenomenal growth potential and a healthy rate of interest for stakers.
Here is another lesser known fact: most passive investors underperform their own benchmark.
For the same reasons as active managers underperform their benchmark.
Great channel! Thank you!
Glad you enjoy it @fxc
Before you pick a single stock, ask yourself "are you Warren Buffett?" If the answer is no, don't do it. - Advice from JL Collins.
Loved the content, enjoy how you just talk numbers and facts which is rare these days 😂 you are The Professor!
What benefit do you think artificial intelligence (Deep Learning) will have on stock picking and portfolio management going forward?
Diamond hands!!! Apes , hold the line!!! 100x my portfolio tomorrow!!!!
What a revelation!
Thank you for the video.
Thanks for watching @muffemod
Gotta love the work of Mr Wigglesworth.
Hi Jonathan I agree I love his articles for the FT. Thanks, Ramin.
alibaba??
All day
Which platforms offer small cap value trackers in the UK? I'm finding it tough to find one?
Vanguard offers a global small cap if I remember correctly, perhaps it offers some other market specific ones as well. Also we should report the the account pretending to be pension craft
Wisdomtree but I think the fees are high.
@@soul0merk yeah thanks man. But it's not small cap value right?
And what do you mean pretending to be pension craft(
Is there an ETF that just buys stocks and does not adjust for market capitalisation?
look for equal-weight ETFs (examples, RSP = S&P index , VTV = value index)
@@Motivation2Invest good tip. Thanks.
What does it mean I'm positively skewed 🔩
8-)
Holding PLTR is fun 🤪
@@user-oy5sv8lq1v fake
These stats make picking individual stocks sound more grim than it really is. This kind of investing is very misunderstood. If you just want to put your life saving somewhere and wait by the mailbox for your wealth to come than even an S&P 500 index fund is very risky b/c you're just gambling. But, if you're willing to learn successful investing strategies, you have a much better shot. You could focus on an industry you're relatively familiar with and find some promising small caps with great growth potential. Small caps are more likely to be overlooked by Wall Street b/c no one has ever been fired for advising to invest in AT&T and few people have the stomach for taking on Cathy Woods kind of risk. But if you work as a nurse (for example) and you see a new drug being prescribed often to help a common medical issue (like migraines, allergies, back pain - you name it), you might research the company and find decent financials, a protective patent, lots of insider buying and other good signs. If you read their annual report, you may see more promise. Not saying there is no risk, but it could be a 20 bagger and that's very different than investing in something Jim Cramer advised to millions of people and is likely overbought by the time it's all over the media. Just saying stats don't tell the whole story. Good day, folks!
If you are Peter Lynch lol
Safemoon is the best option.
Perfect notebook to scribble your thoughts on current market conditions, plans or strategies! Keep track on your past trades, write down all your learnings about different aspects of the economy and plan your next investments @t
Wow. 20% of all stocks are 3 baggers or better!
"Don't look for the needle in the haystack. Just buy the haystack!" John Bogle will never be proven wrong on that
@@user-oy5sv8lq1v Do you have grindr too? Scammer
Why pick top stocks when an ETF does it for you?
Buy good companies, don't pay too much and do nothing.
One thing to remember is that the markets and income of the failed stocks have been taken by the successful stocks. That's why they failed.
TQQQ would do: Amplification of the haystack 3X
Yeah but I'm smarter than everyone else.
Checks index.
Yeah, never mind.
So... most fund managers dont outperform the market. Hmm, ok. Good thing I'm not a fund manager. Also good I dont randomly pick stocks.