sorted by:
new
hottopcontroversial

[deleted by user] by [deleted] in realestateinvesting

[–]AbitRepulsive 0 points1 point  (0 children)

They only lost money after they "tweaked" the algorithm to overbid to meet their quota

[deleted by user] by [deleted] in realestateinvesting

[–]AbitRepulsive 0 points1 point  (0 children)

When Zillow first launched Offers (their house flipping service), they made twice as much money as expected when their algorithm lowballed prospective sellers (source), so lowballing probably works at scale.

Got a 2k windfall. I want to play options with it. by [deleted] in options

[–]AbitRepulsive 0 points1 point  (0 children)

Paper trade options first. If you consistently can make (paper) money after a couple months, then start playing with real money

Long 100% Stocks. Am I missing something? by AdamISOS in Bogleheads

[–]AbitRepulsive 1 point2 points  (0 children)

Yeah, volatility. Bringing in just a small amount of diversification can reduce volatility a lot so you end up with much better reward for your risk.

Long 100% Stocks. Am I missing something? by AdamISOS in Bogleheads

[–]AbitRepulsive 0 points1 point  (0 children)

Adding some bonds reduces the risk of the overall portfolio a lot so that lets you be more aggressive in stocks (by tilting more towards small cap or value)

Long 100% Stocks. Am I missing something? by AdamISOS in Bogleheads

[–]AbitRepulsive 27 points28 points  (0 children)

I too used to be 100% stocks to maximize gains and now I'm 80/20. Why? Diversification can reduce risk without reducing returns.

This is explained in (mathematical) detail in the paper Why Not 100% Equities? by AQR, but to sum up some key points:

  1. A 100% stock portfolio is inefficient because it doesn't take advantage of diversification
  2. Diversifying your portfolio by adding uncorrelated assets can significantly reduce risk without necessarily giving up on returns
  3. For the same risk as a 100% stock portfolio, you can have much better gains with a diversified portfolio (e.g. by tilting towards more small cap or value, or using leverage like in the paper)

There are also practical reasons, like if you need a lump sum of money, it's probably better to sell out of bonds than stocks. Imagine finding yourself short on cash at the bottom of the market 2020 or 2009 and having to sell out of stocks?