Comments by "JP 72" (@739jep) on "Ben Felix" channel.

  1.  @chessdad182  if you evaluate investing strategies based on single year performances than you’re doing it wrong. Regardless , small cap value has been holding up quite well this year.
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  2. Excellent video once again Ben. Keep up the good work!
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  3. I’m lucky enough to live in a location with great public transport so that even owning any car is a luxury that’s not really worth it. I know that’s not the case for everyone , but I do get the sense a lot more people would be just fine living without a vehicle. …. More money to throw at index funds ;)
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  4.  @MrSupernova111  it’s not hypocritical at all , no investment strategy is 100% passive , important investing decisions still need to be made if someone is investing passively in etfs. Of course I’d expect someone with an ‘academic and professional background in finance’ to already know this , so you’re either here because you have forgotten everything you’ve learnt already , your employer has brainwashed common investing sense out of you in order to improve the company bottom line , you’ve read a little too much Phil Town , or you’re here just to stir the pot. Have fun I guess 😂
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  5.  @DividendGuy  PWL publish them online. It doenst take long to find and work it out. If you don’t know yours or theirs then you can’t compare them properly. That’s the bottom line. He’s not laughing at divided investors , he’s providing evidence backed reasons why it’s sub optimal to chase dividends. The performance of dividend stocks doesn’t do anything to refute those points. He doenst need to show his own results. That’s some smooth brain thinking. You can evaluate investment decisions based on a sound understanding of financial theory and knowledge of the empirical work done in financial academia. Returns are not score cards. Ignoring that, Ben published a white paper with his proposed portfolios. That’s more than most people do. It’s open to the public for scrutiny. We don’t even know what is in your portfolio. You can flex all you want about your performance , but if you can’t even provide your own exposure to the factors then it counts for nothing. All you do is come across as having no comprehension regarding what was discussed in the video. Ben himself even states that dividend funds have outperformed the overall market , and he explains why. Ignorance truly is bliss I guess 😂
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  6. Was not prepared at all to hear you say ‘Bullshit’ 😂 nearly spat out my coffee 😂
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  7. Yeh I think it helps them stay invested , which is a beneficial behaviour even if it is based on flawed reasoning
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  8. Really churning out the great content now Ben! Thanks again 👍 At a faster rate I should say, it’s always been quality !
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  9. He’s not favouring international securities over American ones - he’s highlighting the importance of international diversification which is very different. I would say he gave a fair representation of where the literature is at regarding this issue. Maybe im wrong though. Have you got your own research that mirrors the quality of the studies referenced here that paints a different picture?
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  10. This analogy doesn’t work, you’re not ‘killing the golden goose’ by selling shares. The ability of the company to generate profits isn’t impacted by how much of the company you own.
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  11. That’s not what he’s doing in this video , and the exact opposite of what he recommends on this channel.
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  12. I’m currently 100% in stocks but always kind of took for granted that I would slowly move into more bonds as I got closer to retirement. Thanks for the video , some food for thought that’s for sure 👍
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  13. Woohoooo!!! Diamond hands!!! 💎 🙌!!!
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  14.  @DividendGuy  if you don’t know then how can you make a fair comparison? I believe Ben doesn’t share his personal portfolio , but PWL has various model portfolios published online and they include the exposure to risk factors at the time of publication. At any rate , you cannot fairly evaluate investment strategies by comparing only returns, especially over a short time period.
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  15. Dollar cost selling / averaging is just another form of market timing. Don’t worry about ‘value traps.’ Just think about rebalancing into a portfolio comprised of low fee broadly diversified etfs with sensible allocations into the broad international market (market weights) , value stocks (weighted by size , value and other fama French factors ) and global bonds. Your allocation should be suitable for your appetite for risk , allowing you to stay invested long term and this allocation should possibly evolve with you as you get older and life circumstances / attitudes to risk change. Be honest with yourself about your attitude to risk , and don’t just use it as an excuse to time the market under the guise of rebalancing due to shifting risk tolerance. Coming up with rebalancing rules or asking an expert to help gauge your level of risk tolerance and think about your future financial goals may be worth while. The decision to move from a more concentrated portfolio into one that’s more broadly diversified may feel like market timing right now because valuations are so high, but ignoring valuations it is still a sensible decision and is backed by the best evidence and theory that exists in the financial literature. Just do it 👍
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  16. ‘Is there nothing about US laws, government, society or geography that gives them an advantage?’ Even if we were to assume that the US is special , this is about investing - youd also have to assume that this perceived advantage isn’t priced into US stocks before not diversifying internationally might make sense. It seems like your comment is just applying the good company good investment fallacy on the national scale is it not?
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  17. The problem with this comparison is that dividends are nothing like rental income … they only feel that way. This is a common behavioural error known as the free dividend fallacy. When your tenant pays you rent the value of your property doesn’t go down. It’s gone from your tenants account to yours. When a company pays you a dividend it goes from their account to yours , problem is you have a share in the assets held in that account. They’re basically paying you with your own money. Dividends and rental income are thus not equivalent. Dividends are a method of returning capital , not creating capital. A fairer comparison would be saying dividends are like the method of payment the tenant chooses to pay you with (cash , cheque or direct debit). ✌️
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  18. The Dunning-Kruger effect seems to me to be particularly rampant in the investing community. People watch a few clips of buffet and read one book and consider themselves geniuses.
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  19. This isn’t even an exaggeration. Just search stock market crash and sort by upload date. Good luck finding a day without many video uploads predicting trouble 😂
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  20.  @johndorian3685  ‘I have no idea what “market efficiency” means’. Well that explains a lot having read your comments. It’s a topic every investor should be familiar with.
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  21. The section of this video where he discussed how empirically dividends don’t explain returns once you account for size , value and market risk. He goes into more detail about this in another video. The problem for dividend investors is that you can target these factors directly , at a lower cost , while remaining better diversified and you would have outperformed the dividend aristocrats through those decades as well.
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  22. ‘Also half of S&P 500 returns are from dividends reinvested’ That’s just a recount of how capital was redistributed in the past , it says nothing about how the S&P 500 return would have looked had those dividends not been paid. It doesn’t add anything to the discussion of whether dividends are relevant or not. If the irrelevance of dividends holds then you could assume that the S&P total returns would have been roughly the same regardless of whether dividends were paid historically or not.
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  23. Maybe have to consider the home bias (if there is one) of the Norwegian sovereign wealth fund as well.
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  24.  @soshityo  ‘S&P 500,’ Warren Buffet on index funds, being wrong yet again
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  25.  @neillamas8929  it’s not my idea , it was discussed in the video . I believe it was when he was discussing a paper called ‘buffets alpha’. That paper explains everything in more detail. The main difference between having an etf portfolio with similar exposure to known risk factors as buffet is that you will have a similar expected return for less risk. (You will have similar exposure to systematic risks but less exposure to idiosyncratic risks.) I believe the risk factors buffet would tilt towards are more than likely (historically at least) value & profitability. To understand this part of the discussion you would need to have some understanding of valuation theory and pricing models, in particular the Fama and French 3 & 5 factor models.
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  26. Merry Christmas Ben and everyone in the comment section merry Christmas 🎄🎁 !
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  27.  @OkaS14A  I think what he’s saying is that buffets returns have been driven by exposure to risk rather than any perceived skill that comes from analysing businesses. That’s very different than saying he got lucky. The key difference is that you could somewhat replicate buffets strategy in a passive way (using etfs) as long as you had similar amounts of exposure to factors such as value/profitability and used similar amounts of leverage as buffet. There’s a paper I believe called ‘buffets alpha’ that looks into this further. This isn’t a knock on Buffets intelligence. He was targeting these factors before they were published in academic papers , which is incredible. But it is a realistic take on exactly how Buffet has generated his returns. You either accidentally or deliberately misrepresented what Dave C said , you’re only saying a straw man doesn’t understand investing at this point.
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  28.  @davec3974  I for one am shocked that somebody who is ‘literate in the economy , finances and market conditions’ doesn’t get what you’re saying or at least won’t address what you actually said😯 😆
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  29.  @davec3974  you made good points , that’s what moving the goal posts means.
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  30. What you’re saying essentially is that you’re happy about money going from your left pocket to your right pocket just so you can put it back in your left pocket
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  31. What makes it a ‘free lunch’ is that it reduces risk of a portfolio without reducing expected returns.
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  32. They’re systematic
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  33.  @gmk22799898  it’s a little tricky to explain , I’ll try my best. You seem to understand the difference between the two so I guess you’re wondering why value and size are considered systematic because firms have different price to book values and different sizes - whereas with market risk all companies are exposed to the same inflation rate for example (more on that later) ? I think I understand the confusion. There’s maybe two ways to approach it. Firstly I think it might be helpful if we suspend the thought that an entire market (as in the whole stock market) needs to be exposed to the risk in question for it to be systematic. With size and value for example I think it might helpful to think of small cap stocks and value stocks as being their own market. These markets as a whole are riskier than their counterparts (large cap / growth ) in the same way ‘the market’ is riskier than US treasury bills. Now remembering that if we consider small cap and value stocks to be their own market - then If you were to only buy small caps / only buy value stocks , it doenst matter how many small cap value stocks you buy , you would not be able to diversify away the risks specific to those markets. Keeping this in mind you could also look at it mathematically. Just like with the market premium (rm- rf) factors can be expressed this way as well (SMB and HML). This creates constants for which portfolios and/or individual stocks can have their sensitivity to these variables measured against. This might be useful to understand the concept. Take (rm-rf) for example - all companies are exposed to inflation risk for example yet all companies in reality face different rates of inflation - but we’re still able to express each companies exposure to (rm-rf) the same can be done for value stocks even if they all have different price to book values. I hope that helps , it’s kind of hard to put into words - I hope I wasn’t completely out to lunch although that’s possible 😂 let me know if you have any follow ups or if you noticed something I got wrong
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  34.  @thomasd5488  that’s not an easy question to answer, there’s probably no definition of what perfect diversification is (at least it’s up for debate). It’s probably easier to tell when someone is not diversified enough within a specific asset class though. For stocks I wouldn’t consider any of the numbers you used to be good diversification , even if they were held at sensible weights. I would say though that holding individual stocks opposed to broadly diversified/low fee etfs/index funds would leave you under diversified. Some may even argue that even investing in a broad based index fund would leave you under diversified as you’re only exposed to market risk rather than the other know independent systematic risks.
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  35. If you can’t see that those two statements are not mutually exclusive then it may be you who is disingenuous. I mean the whole video was about why both those statements are true. You can have it both ways. The reason the dividend aristocratics have outperformed the S&P500 is due to other factors - not dividends. He began the video by saying one of the biggest challenges to investors is understanding that dividends do not matter to your returns. Maybe you just haven’t understood , and he’s in fact telling the truth. As for stock buy backs being illegal until 1982. He was comparing how companies return capital to investors all the way to 2016. That’s 34 years they were legal to analyse the trend.
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  36. No I don’t think he is.
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  37. GDP growth is irrelevant to the conversation. Your returns are based on what you pay in relation to future profits , not what those future profits are. America could still be successful in terms of economic growth and could still experience mediocre stock market performance. (Changing investor attributes towards risk , increase competitive , share dilution to finance future projects etc ) Nobody knows what any market will do and that’s the point, you shouldn’t pick indexes , just be well diversified across the globe.
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  38. Your statement would only make logical sense if gold was the highest returning asset over the last 100 years - which it wasn’t and it’s not even close. Stocks have outperformed gold in the last 100 years - by a very large margin. It’s therefore a mathematical certainty that any portfolio that includes an allocation to gold would have returned less than a portfolio with 100% stock allocation. I’m assuming you’ve left out some kind of caveat?
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  39. Having broad exposure to the value factor is perfectly reasonable and rational. Picking individual stocks on the basis of value is not - but that’s not what he’s advocating for. He did say that it’s difficult to answer the question ‘are good companies good investment’ because everyone has different definitions as to what a good company is. We need to know what people mean by ‘Good company’ otherwise the proposition is non falsifiable making it useless. Regardless , it all comes back to price anyways , if a ‘good company’ is priced as if it were a ‘good company’ then the investor has no logical reason to expect alpha. For the phrase ‘a good company is a good investment’ you would have to assume the market is systematically undervaluing ‘good companies.’
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  40. Where was he wrong though?
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  41. I’d say the main point is not to pick stocks and instead invest in broadly diversified low fee index funds.
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  42. The money does return to the bank (assuming the loan is paid off of course) but that doesn’t mean that money has left the economy. The bank doesn’t erase that money , it can pay it out to shareholders - pay debt , pay employees etc etc etc
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  43.  @MrSupernova111  Broadly speaking you need to make decisions related to Goal formation , asset allocation , insurance needs , estate planning , product allocation and tax planning. This can involve decisions like how much leverage to use , how much home bias is acceptable , how much of a factor tilt to employ , is it even possible to efficiently target factors given the products available, does it even make sense to target factors based on your individual financial objectives , you need to make decisions related to the tax efficiency of your investment products, how much should you allocate between stocks bonds and other financial assets , when should you rebalance etc etc. And that’s just a start. This is an iterative process as well , people and circumstances change so these decisions need to continue to be made.
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  44.  @OkaS14A  he’s not wrong though. It might feel like he’s wrong to you based on personal experience but this is something that has been researched extensively for years and has a lot of support empirically. Id estimate that it’s about as controversial to finance as evolution is to biology these days.
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  45.  @davec3974  did you try changing your YouTube name to ‘W. Buffet’ yet? Name seems to have a lot of street cred with the YouTube communities financial literates.
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  46. Still irrelevant. Mature profits that produce profits can either pay a dividend or not pay a dividend. Focussing on dividends will exclude companies that are mature / profitable that don’t pay dividends. This leads to under-diversification.
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  47.  @alankoslowski9473  I think there’s just some confusion or disagreement involving the semantics here. I don’t think he’s saying dividends themselves matter to the decision making of investors or that they should be favoured. I made that mistake as well reading the post originally. I believe his point is more a philosophical one - that is, businesses must have the potential to pay a dividend , otherwise the nature of a business would fundamentally change. I would say businesses wouldn’t even be business without this potential. I can’t think of many reasons why anyone would start a business if they couldn’t have the profits distributed to them. What is not being said is that investors should favour dividends or dividend paying companies are preferable - it’s just that if they weren’t allowed or even possible then the very nature of business would be fundamentally different - and that gives dividend some kind of pseudo / philosophical value at least. But it doesn’t make a dividend paying company better than a non dividend paying company. All companies have the potential to pay a dividend , its just that the decision of whether to pay one or not matters nought. But yes. I think we all agree here that dividend focussed investing is irrational and that’s what matters.
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  48.  @jl8252  the key here is if these historical premiums are because these types of stocks are riskier or because investors have behavioural biases. Performance can be expected to continue if the historic premiums are risk based (and therefore there is no alpha). If they are behavioural based then yes we can expect them to disappear post publication, due to the mechanisms you’ve described. Perhaps not immediately however as behavioural biases can be persistent even after identified. This does not mean that the historical premiums are predictive of the future in the way you’re describing. We know that historically these premiums existed , but we don’t know when or by what magnitude they will show up in the future - we just expect there to be a premium over the long term. It’s the exact same thing with the market premium , yet people are always pretty confident that long term stocks will provide a return. By your same logic it’s possible that stocks never again return a premium over treasury bonds - and I agree it’s possible , but I’m not going to invest as if I expect that. We have a strong theoretical basis as to why these historical premiums are risk based and these risk factors are currently included in pricing models that explain approximately 95 percent of asset prices. That’s a pretty useful model I think.
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  49.  @Nasdel  I would say that they have higher expected returns , but not higher risk adjusted returns. Size , value , profitability, market and investment are ‘risk factors’. The reason for the higher expected return is the higher risk. So to increase exposure to those types of stocks you may want to consider your own tolerance towards risk.
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  50. Before considering tax and transactions costs your net wealth would be the same. This is because the drop in share price is due to the business transferring capital to you. It’s not a discounted share price, it’s just what the company is worth considering they just lost a lot of cash on their balance sheet. After considering those things your wealth will likely be less, or at least .. if the company doesn’t pay dividends you can then decide yourself when to incur tax and transaction costs by selling shares.
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