What If You Only Invested at Market Peaks?
Вставка
- Опубліковано 20 гру 2020
- This is the story of Bob, the world's worst market timer. Follow along on Bob's journey as an investor who had the misfortune of only investing his savings at the peak of the stock market just before a crash. The results may surprise you.
Check out Ben's post that inspired this animation: awealthofcommonsense.com/2014...
Sign up for The Compound newsletter and never miss out: www.thecompoundnews.com/subsc...
Talk with us about your portfolio or financial plan here: ritholtzwealth.com
New to investing? Check out our Liftoff platform: liftoffinvest.com
Twitter: / thecompoundnews
Facebook: / ritholtzwealth
Instagram: / ritholtzwealth
Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here:
ritholtzwealth.com/podcast-yo...
#investing #stockmarket #retirement
Bob is simply the best diamond hands i ever known. His mentality is amazing
buy high, buy high
*BOB BOUGHT SPY, THE TOP IS IN!*
dump eet
You cannot time the market...That’s the biggest lesson I’ve learned from this pandemic and the bob video. Time heals all wounds...fantastic video. Just wait it out and pay your dues.
Yo Ben, this is 🔥🔥🔥!! Well done!
thanks!
message received - buying tesla calls with my life savings tomorrow
A great video to watch during downturns & meltdowns. Yes, this generally applies but there are exceptions. How about a Japanese investor who put everything into the Japan stock market in 1989 just when they were about to enter retirement (with no more regular income to invest later)? That would be a nightmare scenario.
True, but USA is not Japan, and that is the WHOLE difference. While the USA is the world reserve currency and the best capital market in the world- and that is not going to change anytime soon - no japan style crash will happen
In that case he had too short a runway and started far too late. The problem is not investing but too little time (the point). If he did it and had 25 years to wait the dividends would have caught him up. As for Japan, there are subtle differences between Japan and the S&P500 but the bottom line is it was a bad idea to bet the whole farm on a country with only 100 million people recently recovered from a world war. I don't think it's possible to divorce politics from economics and the reason the S&P500 is resilient is due to America's status as a superpower. The lesson of Japan is don't go all in on any country that's still in beginner's gains or has lost a world war.
Japan de-leveraged. They can't grow their markets if they pay down their debts
Didn't even watch the video yet and already pressed "LIKE". I know it's going to be good!
Interesting to see actual animation from you guys, I like it.
you guys should produce more cartoon like this. definitely one of the most enjoyable piece on this channel ever :D
Wow, extremely well-done video, Ben! Everybody should watch this.
thanks!
Like virtually everything you create or speak about, great job Ben. Keep it up.
thank you!
Adorbz. And a big round of applause to the animator, well done to you both!
Everyone needs to watch this. You will learn essentially everything you need to know about investing in 5 min.
Well done, Ben n Bob
This video is absolutely awesome. Wish I had found it when I was still teaching high school personal finance; I would definitely have shown this one in class (probably once a quarter just as a reminder!).
Glad you liked it, Dale! Thank you!
Very nice! Hope this becomes a series, looking forward to sharing to my clients.
will see what I can do
What if Bob invested in the DJI (dividend reinvested and no taxes)
Nov 1980 - $8K >> +9065% >> $733K
Aug 1987 - $16K >> +2315% >> $386K
Dec 1999 - $54K >> +300% >> $216K
Oct 2007 - $50K >> +175% >> $137K
Portfolio value in Dec 2019: $1.47M
Astounding!
I like this. We need more of these !
This gives me hope
Very well done. Sent to my entire family.
thank you!
This is amazing. The original article was one of the first pieces of financial content I remember reading when I began learning about investing. Years later I found Ben and the ritholtz gang and didn’t even realize this was written by my boy Ben! Thanks for the video, important context for newbies
thanks very much!
Such an important video!
What an amazing channel. If you're reading this Vaibhav bhai, thanks a lot for recommending
Great Video!
Love this new format. The animation and narration is such high quality. And the lessons are so helpful, especially is the current bull run. Thanks and more of these!
thank you!
Great vid!
What would be the inflation adjusted returns though?
Good job, Ben. I still enjoy watching you and Batnick trying to irritate each other more. Great show!
it's all love ;)
This video is great.
Amazing video!
can you run this scenario back ward?? buying only at market lowes??
This was such a well-produced and easy-to-digest video about the magical eight wonder of the world - compound interest 📈
That was gold and the cartoonist did a great job
Fascinating
Can you do the same thing for Seto in Japan and Sergio in Europe? I think the structure of the currency/credit system has to do a lot with the constant equity bull markets.
Ben talks about Japan in the post: awealthofcommonsense.com/2020/12/what-if-you-only-invested-at-market-peaks/
Awesome video, Ben. This should be mandatory viewing on Robinhood before you’re allowed to make a trade.
This is so damn good.
Another key point. If you miss the days with the best returns (which happen during bear markets as well), your long term returns will be muted.
While he turned out ok, let’s not pretend leaving 1.4M on the table isn’t bad. The lesson here is DCA is better than trying to time the market for this style of investing, not poor market timing is ok in the long run. Let us know the next time Bob makes a purchase so I can sell everything.
The cartoonist did a good job. All us regular readers know Bob turned out just fine.
The key is not sell. Right on!
I don’t think that’s the message here. Systematic rebalancing of your portfolio (selling winners, buying laggards) has its merits.
Everyone in corporate America should watch this. It should be a pre-requisite for a 401k plan.
Shared with my daughter. Good information in an entertaining format is what many new investors need.
Thanks for sharing!
thanks for spreading the word
this was great
phenomenal
Can someone show me the math of the compound interest?
Time is our most valuable asset, both in life and investing. That should dictate how we think about health, wealth and relationships.
Ben, Diego, and Duncan - I hope you do more of these entertaining educational pieces. I find hearing this kind of thing serves to confirm I'm making the right choices. 👍💰
thanks we're going to see what we can do
This is great. Really underscores the value of saving and staying in the market. Like the new video concept too
Glad you liked it, Dan!
What a great video!
What's his compounded annual return?
Love it. Disney should do one like it so kids will learn about money.
Great video.
Thanks!
When is Bob’s next purchase? I have puts to buy!!
Compounding is the 1st wonders of the market!! 😉😀👍
learn alot from this video
Glad to hear!
How can you not be confident in future of stock market after this?
Very good. Please do one for the guy who sold when PE ratios were above 30 and only bought under 20. Or someone who didn't continue buying above 30 PE.
check this one out: svrn.co/blog/2017/5/14/waiting-for-the-market-to-crash-is-a-terrible-strategy
@@bencarlson6302 Interesting. My strategy isn't to sit in cash, but I'm in 100% international stocks, with about 80% lower valuation/higher growth emerging markets. Performance has lagged U.S., but I just can't stomach the U.S. valuations. I'll roll back into U.S. equities if/when the valuations start to flip.
yo bob's a genius
Nice
Lots of employees, LOTS, need this - complacent. Ray Dalio did something similar 👍
He bought?...dump it.
Cool
Excellent work. Hilarious.
so buy GME??
Nice video, but note that Bob's investing career coincides with a historic drop in interest rates. With fed fund rate dropping from a high historic high of well over 10% at the start, to being indefinitely pegged to zero at Bob's retirement.
An extremely important note! Whether oversight or intentional, still concerning. Data is so....malleable.
In hindsight you can always time the market
Put Batnick's Bigly hat on the thumbnail cartoon: clicks 📈
One thing that wasn't mentionned was that Bob didn't have any margin calls
0:34 From 1970 to 2000, interest rates were much higher, so Bob wouldn't earn nothing in his bank account. In fact, he would earned 10% interest on savings in the '70s and '80s. The SPX vastly underperformed cash from 1970 to 1982. Even at the start of 2000, the 30-year US treasury yield (TYX) had a yield of 6.7%, and the 10-year US treasury yield (TNX) had a yield of 6.6%.
4:49 There is no compound interest in the stock market, but you can invest dividends. Compound interest can be earned only on cash, and not even on bonds.
This video understates how much of Bob's wealth comes from regular contributions to his portfolio rather than from SPX appreciation. Not everyone is young enough to have Bob's long investment time horizon; even Bob would be 80 today. Such impressive gains came only from the US stock market; had Bob invested in other markets, his gains would not be nearly as impressive.
Yes! Weird how they called it compound interest instead of reinvested dividends. Also, I wish they had made it clear how much money he put in the market total, the exact market gains of that money, and the amount of cash he saved after he stopped investing in the market.
Bob kept his money in a checking acct. That was stated in the video. You're splitting hairs here
Now do buying peaks in the most bubbley assets of the bubbles -- 2007 in $XLF, 1999 in $XLK, 1987 DJIA?, etc.
I actually think it wouldn't be as bad as one would expect, despite the larger drawdowns, so long as he didn't sell. He might even come out ahead?
Be a Bob!
Curious what his nest egg would have been worth in 2008 2009. I may have to recreate it myself in a spreadsheet to satisfy my own curiosity. I would like to think that the initial investment in 1980 had grown enough over 30 years to offset the dot com and 08 crash. Obviously the last 10 years have done wonders for anyone who had stayed in the market consistently.
He bought?
Now can we get Batnick to do one of these??? Or maybe Josh can narrate one lampooning him 😉😆
Great video. Would have been even better if they clarified at the end the total money he put into the market and the total he had saved in cash to get to the final 1.1 million.
He invested $128,000 in the market and had an additional $102,000 in savings when he retired :)
Excellent cartoon but some Internal Rate of Return figures for Bob's investments would have been nice.
bobs other saving grace is that he was able to increase the amount he deposited by 2000 a year every ten years.
One critique: Bob invested at the peaks of a remarkable what many people call 1980 to 2021 bull run...
Had Bob invested at other time periods, I'm not so sure..
I do agree, the given example is not perfect, but still i cannot name a better investment strategy for all your life savings than dca into sp500 etf.
Something that every college graduate should see. Nice job Ben. I'd like to see the inverse of timing every investment at the bottom of bear markets.
check this one out: awealthofcommonsense.com/2014/07/bought-near-market-bottoms/
This is me this past February when I cashed out 😢
Yes, but did he increase his purchasing power? 50,000$ in the 70's ain't the same as 50,000$ in 2020. Would other assets have done better?
How could that possibly be you ask? A huge increase in the M2 money supply and a weakening Dollar. A "millionaire" means much less each decade, with no 'real gains' since 2000 if you chart SPY over M2 supply.
The population in the USA has more than doubled since 1970. How could the USA function had there not been an increase in the supply of money? It would be insane!
Time on the market beats timing the market.
More videos like this please !!!!!!! Also glad Micheal was not in it
That's why you want to invest in installment
Was this written by Ben Carlson the neurosurgeon?
I know a Bob who takes his money out of the market at the low!
👍
buy high, buy high
I am Bob but I sell at lows too
Do one with the bottoms and include black swans lol. I will like to see what the difference is
Ben did an article about buying at the bottom a few years back: awealthofcommonsense.com/2014/07/bought-near-market-bottoms/
The key for this to work is that 1. He never sold, 2. He Bought Vanguard S&P 500 funds
bob is the ultimate hodler
i am Bob now 😀
Bobs biggest mistake was not spreading his shares, to much at once = greed and a market flip. Silly bob.
Would this have worked if he invested in the Nikkei 225 near the peak? :)
Ben mentions Japan on his post: awealthofcommonsense.com/2020/12/what-if-you-only-invested-at-market-peaks/
Okay, now what if Bob invested in a Nikkei index tracker at the peak of the Japanese bubble in the early nineties.
He said after we embark on the long path paved by japan.
Then let’s hope he diversified internationally :-)
Hi I'm Bob. I'm going to invest 20k into a S&P 500 etf next month.
Picking the beginning and ending point on this makes a big difference, we're ending Bob's experience at one of the most expensive markets of all time. How did he do if our endpoint was the beginning from Feb 1969 to Feb 2009? A measly total return of 26% over 40 years. And, under this scenario, he would have built up his larger amounts in the latter 20 years, just to have it crushed in 2000 & 2008.
correct ! but why BOB has to sell everything in Feb 2009 ? He can sell only what he need for day to day expenses; and he can enjoy another 10 + years of market growth