Josh Brown takes CNBC readers to school:

 

Category: Asset Allocation, Investing, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “Building a Beginner Portfolio”

  1. Greg0658 says:

    I really think until laws exist that corporate stock certificates are required to pay interest on the money folks hand them – “to do their will” – we will be caught as laborer/consumers in this vicious tide pool of corporate power .. buck it up – starve the beast – before it’s to late .. it’s obvious the Parker Bro. Monopoly board is loosing players – and we all know what happens when there is just 2 – boredom for everyone else

    remiss to not spew 1 more time – the robinhood effect – redistribute the air – exhale it – recycle it – round’N’round

    that brings the the game board rules into question – that being > spare the rod spoil the child as incentive .. without spanking or starvation how do we get the kids to produce .. hummm – good one

  2. Greg0658 says:

    psst – remiss not to add – I don’t know how to undo the damage done:
    by selling your stock certificates to anyone other than another labor/consumer (who understands the ramifications) – if the corporation is healthy as a producer and buy back their certificates themselves they own themselves privately and no longer are required to share their productivity and powers

    - the only recourse is the robinhood effect via law .. and the law is bought – so sorry

    you can’t burn your certificates as vengeance – ie counter productive (hense – I don’t know) except that a fine game board was invented

    those dang dualing novas of cash and corporate stocks (uugg)

  3. VennData says:

    VTI is better than SPY since you’re pulling in all the stocks. VWO is cheaper than EEM, but VXUS is better still, wait don’t get into small caps or other yet.

    And to really keep it simply and organized, eschew ETFS in the beginning and move into plain-old Vanguard mutual funds versions of the above ETFs (you can convert at a latter date, for no charge.)

    And that one example of lump sum, as Josh notes, it one example better to push everything in at once but you should do this into you asset allocation which includes some bond indexes, like TIPs

    “…For a completely rational investor, lump sum investing will always produce a higher expected return, because it immediately moves your funds from asset classes with lower expected returns to ones with higher expected returns…”

    http://www.bogleheads.org/wiki/Dollar_cost_averaging#Dollar_cost_averaging_versus_lump_sum

    “Expected return” is different from “return.” You don’t know what you’re return will be. The best you can do is operate with expected returns.

    And just leave it if things go down, or up and stick to your plan, which should be written down before you do anything as an “Investment policy Statement.”

    http://www.bogleheads.org/wiki/Investment_Policy_Statement

  4. mobellus says:

    While he was right to point out the DCA vs. Lump Sum chart was subject to the timeframe he picked, I think it is still misleading. Bottom-line is most beginners don’t have the lump sum to start w/ & DCA is the only reasonable choice to get & be invested. Odd are (see Vanguard research report below) if you have a lump sum, it pays to use it. It’s nice to see the chart to make the point, but it might be better to also show the opportunity costs if you wait to build a lump sum (again, subject to timeframe) or the fact that waiting may be permanent.

    https://pressroom.vanguard.com/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf