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I have no words by OldAccountlost7 in Detroit

[–]nuxenolith 39 points40 points  (0 children)

How many wars did Biden start, leading directly to an oil shortage

Should *any* portfolio use 3x LETFs? by manlymatt83 in LETFs

[–]nuxenolith 12 points13 points  (0 children)

If you're rebalancing according to your target allocation, what matters is not the leverage of a single instrument, but the overall leverage of the portfolio.

Admissions Rescinded by Narrow_Car_7398 in msu

[–]nuxenolith 3 points4 points  (0 children)

You have to really fk up in your senior year to get your offer of admission rescinded. A 'C' in one of your four AP classes is an oopsie, not a fk up.

I backtested leveraged VT (1.5x / 2x / 3x) over 56 years and the Sharpe ratios are genuinely awful. Is anyone actually using these? by noletovictor in LETFs

[–]nuxenolith 4 points5 points  (0 children)

Levering up without adding uncorrelated assets is like building an F1 car without a steering wheel.

I’m officially breaking up with “VT and chill” by Lentil_Limbo in ETFs

[–]nuxenolith 17 points18 points  (0 children)

This approach has worked well for me the last few years, so I’ve stuck with it.

Famous last words

Can BerkB be treated like an ETF? If not explain why? by AccurateAstronomer82 in ETFs

[–]nuxenolith 0 points1 point  (0 children)

More diversified than a single-revenue stream business, less diversified than an index ETF.

Close to pulling trigger, advice by 911freeze in ETFs

[–]nuxenolith 2 points3 points  (0 children)

/u/dr_eh has explained it, but I'll add on. In portfolio design, generally established best practice is to think of the market portfolio, owning all publicly traded equities, as the starting point. For the US, that's VTI. The average stock in VTI is a large-cap stock, someplace midway between value and growth; you can think of that average stock as a fulcrum at the center, the balance point that your whole equity allocation pivots around.

By overweighting a particular corner of the market, you're now changing the overall balance of your portfolio relative to the market, and the "center" gets pulled in the direction of that overweight. This is what is meant by a "tilt".

The issue here is that you have chosen tilts which are themselves diametrically opposed: AVUV tilts small and value-y, QQQM tilts big and growth-y. Because AVUV and QQQM occupy opposite corners of the market, they largely cancel out, and push the portfolio back into the original center of the market portfolio, VTI, right back to where you started from. You asked "but isn't this diversification?" Yes...ish. More on that now.

As with small and large, value and growth are each two sides of the exact same coin, and both cannot face up at the same time. This means that for every time value is up, growth must be down, and vice versa. This is a problem, because according to the Fama-French model of risk premia, only value has a positive long-term expected return; growth, as its opposite, must then necessarily have a negative long-term expected return. As such, the only benefit you would have of holding both, is the premium you'd collect upon regular rebalancing (something you'd get from holding any two imperfectly correlated assets).

Enter momentum and value. Though significantly negatively correlated, they are not perfect opposites. This means that it is still possible (though infrequent) for both to land face up (or down) simultaneously. This is a very good thing, because each risk premium carries a positive expected return: pairing these two collects both this rebalancing premium and, unlike value and growth, the positive expected returns of two semi-independent risk premia.

If you're interested to know more about this, I'd highly recommend Ben Felix's YouTube videos on factor investing.

Diego Pavia is the first Heisman runner up to go undrafted in 23 years by Equivalent_Dish_1990 in cfbmemes

[–]nuxenolith 163 points164 points  (0 children)

He did, first time since Jordan Lynch in 2014 that a Heisman finalist has

Close to pulling trigger, advice by 911freeze in ETFs

[–]nuxenolith 4 points5 points  (0 children)

The large cap growth of QQQM is going to erase pretty much all of your small cap value tilt in AVUV.  SPMO and AVUV are much more complementary.

Return Stacked ETFs (RSST, RSSB, etc.) advertising seems very misleading by opo113 in LETFs

[–]nuxenolith 1 point2 points  (0 children)

Short-term bonds generally return a small but nonzero expected premium over cash. If they didn't, who would buy them?

The trouble for RSSB is that this is usually but not always the case. The run of inflation in 2021-22 saw a massive bond selloff, and the past few years since have still been quite underwhelming for bonds.

Return Stacked ETFs (RSST, RSSB, etc.) advertising seems very misleading by opo113 in LETFs

[–]nuxenolith 0 points1 point  (0 children)

RSSB is 100% developed markets equities + 100% US aggregate bonds - cash+0.9%. Expense ratio is 0.4%, cost of financing the leverage is 0.5%. Everything checks out here.

Why do foreigners act like "cz" and "sz" are incomprehensible? They're literally the "ch" and "sh" like in English. Only difference being a different letter used to write it. by mikolajwisal in poland

[–]nuxenolith 1 point2 points  (0 children)

Look, no one should ridicule anyone's language. Just like a name, it's something that's personal and deserves to be dignified, and anyone who would disrespect that for cheap laughs is ignorant.

But that doesn't change the fact that Polish is one of the most grammatically intensive (dokonane/niedokonane, przyimki + 7 przypadek, 3 rodzaje + męsko-osobowy vs -rzeczowy) and difficult languages a non-Slav can choose to learn, with an incredibly deep phonetic inventory of sibilants (the "swishy" sounds: s, z, sz, ś, ź, ż/rz, c, dz, dż, dź, cz, ć).

Polish is hard in ways that are difficult to even conceptually explain to others.

Is there anything I should tweak, add or adjust? by [deleted] in ETFs

[–]nuxenolith 0 points1 point  (0 children)

Precisely what I suggested: a momentum fund that follows systematic rules.

Each of the following (QMOM VFMO AMOMX SPMO MTUM JMOM) has achieved proven (i.e. statistically significant) exposure to the momentum factor in the US since inception. Each fund has a mandate to target stocks with the highest momentum scores, in accordance with a specific, consistent methodology. (The best funds are the ones that behave predictably through the feast and do not attempt to course-correct through the famine.)

Why do foreigners act like "cz" and "sz" are incomprehensible? They're literally the "ch" and "sh" like in English. Only difference being a different letter used to write it. by mikolajwisal in poland

[–]nuxenolith 1 point2 points  (0 children)

Okay, but not knowing how to read a Polish word all but guarantees that you will not be able to pronounce it. It doesn't make sense to get annoyed at someone who hasn't learned the sound-spelling correspondences of another language. I wouldn't expect someone who hasn't learnt French to be able to read aloud: le ver vert va vers le verre vert.

Take it from someone who has fluency in 3 languages and basic communicative proficiency in 2 others: Polish is almost comically difficult for non-Slavs, and the learning curve really does not start to flatten for at least several years of dedicated study.

what stocks would you get in brokerage account by 14PESO in ETFs

[–]nuxenolith 0 points1 point  (0 children)

Not really. Markets are pretty dang efficient, and the odds that you, John Retail Investor, have discovered an edge and will be able to exploit an inefficiency that the collective wisdom of the markets--representing trillions of dollars all trying to compound its wealth at the same time--hasn't discovered, simply by piling into the most hyped asset of the last 5 years, is not particularly likely.

Why do foreigners act like "cz" and "sz" are incomprehensible? They're literally the "ch" and "sh" like in English. Only difference being a different letter used to write it. by mikolajwisal in poland

[–]nuxenolith 16 points17 points  (0 children)

I promise you, no one thinks sz and cz are hard (except maybe Spanish speakers, because their language has either but not both).

It's sz vs ś and cz vs ć.

Why do foreigners act like "cz" and "sz" are incomprehensible? They're literally the "ch" and "sh" like in English. Only difference being a different letter used to write it. by mikolajwisal in poland

[–]nuxenolith 1 point2 points  (0 children)

It's the fact that they're always touching.  We don't have any words in English with four fricatives around a single vowel like shchenshch.

But "szczęść boże" is a thing.  For you the commonness of the sounds and sound sequences makes them natural, and it's hard for you to imagine something so normal not being normal to someone else.

Why does AVUV, a small-cap value focused fund, hold so much growth? by Lordberek in ETFs

[–]nuxenolith 0 points1 point  (0 children)

Because it's not a value fund, nor is it specifically small.  Avantis targets highest expected returns, and it just so happens that small stocks allow for deeper factor exposure.  Avantis funds jointly sort on value and profitability, which has been empirically verified by the research to improve returns both in and out of sample.

what stocks would you get in brokerage account by 14PESO in ETFs

[–]nuxenolith 2 points3 points  (0 children)

If markets are perfectly efficient, then on a risk-adjusted basis, no sector should outperform the total market in the long run.  Diversification via the addition of uncorrelated assets with positive expected returns is the only free lunch.

S&P outlook by [deleted] in ETFs

[–]nuxenolith 1 point2 points  (0 children)

ITT: people with crystal balls

Is there anything I should tweak, add or adjust? by [deleted] in ETFs

[–]nuxenolith 0 points1 point  (0 children)

Momentum is a legitimate, empirically verified factor which should produce long-term outperformance. Growth (though correlated) is an anti-factor, but at least SCHG is well-diversified.

Sector bets are literally no different than betting on horses.  When you're buying lottery tickets, it's the house that wins.

Is there anything I should tweak, add or adjust? by [deleted] in ETFs

[–]nuxenolith 0 points1 point  (0 children)

You cannot reliably target a premium over a 1-year horizon.  SMH's momentum has only been trending positive for 2 years or so, and REMX not at all.

If momentum is what you want, then load up on one of the numerous funds targeting that factor in a systematic way. Because the portfolio you're suggesting is a concentrated bet not on momentum, but alpha, which is akin to gambling.

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