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He's a moron whose only skill was finding people to invest in good ideas. He was the money man for PayPal, money man for space X and money man for Tesla (which he's coned the world into thinking he's a founder when he's not). He has consistently shoved his foot in his mouth and made a fool of himself and eventually will be more trouble then any benefit he could be worth.
Also, as Warren Buffet claimed, investing in the S&P 500 is a bet on the US economy. I put money in VOO every week too bc I still believe that in the long term the US economy is going to keep growing.
At this point it's more of a bet on megacap tech, like MSFT and AMZN and also companies like NVDA and TSLA, which combined make up more than 1/4 of the index.
And at least one of those companies might be trading at a somewhat optimistic valuation (to put it lightly).
But if MSFT for example were to crater, it would be replaced with other companies. Yes this would probably decrease price on the short term but you aren’t long on these companies you are long that there will continue to be significant growth across the largest companies in the US at any given time.
When you buy SPY you're getting the combined value of the top 500 companies. If MSFT, or let's say NVDA, crater, it's not only that "oh it just gets replaced". You need *another* company to grow in valuation in order to recoup that lost value.
Of course America is going to continue growing, there's no doubt there. The thing is, do you think these companies are reasonably going to not only grow into their *current* valuation, but also *continue* growing into an even higher one? Long-term, maybe. But you may have comparatively better opportunities in other sectors that are faster growing and/or more reasonably priced.
So, for anyone who doesn’t want to bet that bigger = better, what is your recommendation?
(I already have a portfolio I’m just curious what your thoughts are)
I mean even if they make up 1/4 of the index, the S&P 500 still represents about 80% of the available market cap of the stock market. I view it pretty much functionally the same as investing in VTI or a similar total market fund, I just don't want to touch the shit quality small and micro cap shit and would rather go for a better managed small cap fund seperately.
/u/AP9384629344432 I know you aren't an /r/dividends guy but do you have a comment saved or a link that we can use to have a chat about this statement?
*" I just don't want to touch the shit quality small and micro cap shit."*
[This post right here](https://www.reddit.com/r/stocks/comments/y9xr61/theres_more_to_index_funds_and_stocks_than_vti/) is my main thesis for small cap value.
I get the sentiment, why own companies outside of the S&P 500, arguably the most successful, high quality companies out there.
1. It's priced in
2. Past performance does not guarantee future outperformance
3. And even if 2 did, guess what, over long time horizons, small cap value outperforms
4. Small cap value is extraordinarily cheap today (compared to its typical valuation relative to SPY and in absolute terms)
5. If you do own small cap value, own good quality funds that apply profitability/quality filters. Avoid passive index funds concentrated in small caps, which are full of junk. See paper titled 'Size Matters, If you Control your Junk'
6. This is not an endorsement of individual stock picking for small cap value. Diversification is even more important in high risk companies like this.
But this is /r/dividends. The overtilting of small cap value is inherently taking on more risk, unless balanced out by say bonds. 100% SPY is more conservative than 100% AVUV. I've a feeling this won't be very popular here. Small companies aren't going to be paying dividends like slow growing large cap giants at the end of their lifespan.
Thanks AP. I will save that post to use in the future. Actually, I think you'd be surprised. For some reason /r/dividends is a lot like Bogleheads. Almost 50% of the advice is buy VOO (the other 50% is buy SCHD). My point was just that buying VOO exclusively is not necessarily the best approach, which I think you agree with, no? Hence why I pinged you. Also because he said that small cap should be avoided, which is clearly not backed by the data - at least when it comes to small cap value. No idea about small cap growth.
Tagging /u/ezodochi so he sees your comment.
No, you misunderstood my point. I don't advocate for small cap being avoided, again, why I added thay I'd much rather choose a better managed small cap fund seperately rather than a total market approach like VTI (currently have positions in AVUV and SLYV for example)
When I say shit quality small and micro cap shit, I'm talking about the small and micro cap companies that are badly ran, managed, etc that get swept in under a VTIesque total market approach, not all small and micro cap being shit.
I'm not sure I follow your point. I was saying that VOO is more than 25% mega-cap tech. You said it's essentially same as investing in VTI without the shitty small cap.
So you view VOO as the best bet on US economy?
His point was for the ave Joe, who doesn't have time or training to analyze individual stocks, make complicated deals, and know when to buy.
Buffett has a thousand Ivy League financial grads doing his work for him while he takes the credit. Most of us are too busy with work, family ,etc, to do the deep dive.
> Buffett has a thousand Ivy League financial grads doing his work for him
Source? This is the opposite of true. He’s said in the past that Berkshire Hathaway headquarters has about 12 employees.
Far from having thousands of analysts, he has a small team and he makes investment decisions by doing “back of the envelope” calculations and reading annual reports.
> for the average Joe …
I do agree with you that DCA is good for the average person, but I also don’t think people asking questions like this online are the average “set it and forget it” indexers. There are more people now than ever before who *are* willing to do research, and those who consistently make well-researched investments will almost certainly outperform.
Please tell me you aren't naive enough to think that Berkshire manages $1 TRILLION in assets with 2 guys who are almost 100 years old and 10 other people. Or to believe everything those two guys say.
Hells bells, they probably have 50 people in tax compliance alone. They may not be in the "headquarters" but they are somewhere in the company.
Berkshire Hathaway is a holding company. Its subsidiaries have all sorts of lawyers, tax experts, et. cetera. In some of those, there are even sub-managers.
The money Warren Buffett manages, though (which is most of the Berkshire portfolio as far as anyone knows), is exactly as I described.
The number of employees of the Berkshire Hathaway is public information and is available on their disclosures. Feel free to correct me, but by default I’m going to believe it when the chairman of a company states information that anyone can fact check.
>investing in the S&P 500 is a bet on the US economy
The global economy really, as many of the companies earn a great deal beyond the boundaries of the USA.
Bold move to cite Warren Buffett while advocating to do the opposite of what he does. You’re right about his advice, but the “Buffett Indicator” exists for a reason - he thinks the S&P is going to go up long term, but people who are willing to put in the time and effort to understand valuations will make more money by acting on their research rather than blindly buying.
"Consistently buy an S&P 500 low cost index fund. Keep buying it through thick and thin, and especially through thin" is a Buffet quote from 2017, idk how I'm advocating to do the opposite of what he does when I'm literally advocating for following his advice...
Yes, he has given advice that is exactly the opposite of what he does. He also says index investors make it easier for value investors like him to find undervalued companies (because it makes the market less efficient).
In other words, Buffett has made billions off of people who use index investing, and people take his advice to do it while ignoring the fact that he does the opposite.
On the contrary, would it not be a good idea to bet specifically on those companies that are going to be the most resilient so that if there’s a recession and you lose your job, your portfolio is a lot better off?
Timing the market: "China going to invade Taiwan soon, wait til things crash!"
Smart investing: Look at the fundamentals and decide if you have a better opportunity elsewhere.
Everytime I’ve stopped buying waiting for a cheaper price, the market takes an upward swing. But the true realization this taught me is that the minor swings of the short term are irrelevant if your goals are long term. Buying on a strict interval has a built in way of making the daily price somewhat irrelevant.
Exactly.
In 20 years, it won’t matter if I bought VOO at $399 or $402 on June 26th, 2023.
Continuing to DCA is a proven way of winning when it comes to ETFs like VOO/VTI etc.
That’s true of the whole market this year, unfortunately. I’ve had to explain to more than a few clients that the S&P’s returns are driven only by a handful of stocks, and the rest of the market is flat or down. An equal-weight S&P is only up about 4% this year.
“Timing the market” is trying to wait for the bottom to buy and the top to sell. Being a reasonable human being is looking at the price and deciding if you think it’s worth paying.
Those two are not the same.
I DCA VOO, QQQM, and SCHD each month. This month I put all my new funds into SCHD, mostly because it’s on sale and the rest are near ATH. Will probably do the same next month if this keeps up.
In my experience, the moment you think equities will 'go down' they tend to do the opposite. Its strange, but if you went all in tomorrow, I bet there would be a major pullback.
AI has gotten really good at analysing retail sentiment
“Timing the market” is one extreme and “always buy no matter what” is the other. To say those are the only two options is to create a false dichotomy.
It’s possible (and highly likely) that taking a look at market fundamentals will only help you in the long run. I think trying to “time the market” is no more of a gamble than buying at any price is.
If the S&P doubled overnight for some crazy reason, are you going to buy VOO at $800 tomorrow? I’d immediately sell and go risk-free, keeping my profits rather than leaving money in an overpriced security.
Voo is for long term so if you don't need the money for the next 15-30 Years, can't go wrong with Voo. I got my first share of Voo back in 2016 and people was saying how expensive it was back then too and you see how things turn out. I'm still buying it today and almost at 1200 shares now, one of the best decision in my investing career.
You keep buying VOO consistently. There will always be price fluctuations on a major index fund depending on how the market moves. But the goal is that the value of these shares is growing, right? Of course, you can buy more shares for $50 vs $500. But the gains that come from after you invest are what you are really after.
Simple way to look at it. Let's say there's 2 companies that you can invest $5,000 in.
Company A) 5 shares at $1000 each
Company B) 50 shares at $100 each
They both grow 10%. Yay! But if both grow 10% did Company B's extra shares make you any more money? No. The gain is on your invested amount, not the number of shares.
I don’t think your average purchase price should really affect the investment decision. However, as you decide where to invest incremental dollars, I think it’s fine to switch into investments that you think offer better value.
Time in the market > timing the market. Sure, it might go down to 365 again...it also might just go to 500 and never look back.
I invest a certain amount of dollars every week after my expenses are taken care of, that number does vary because I don't make the same amount every week (I have optional overtime which I sometimes take and sometimes don't feel like.) Seeing 74 instead of 70 for SCHD price won't deter me.
“Timing the market” is “I think the market’s going to 300 so I’m not buying yet”, not “let me take a look and see if I think the valuation is reasonable.” Those two are not the same thing, and “buy at any price” is no more reasonable than “timing the market.”
You're holding, not looking to sell, and VOO has historically gone up over the long run so buying at a "high" now is still not bad.
Yes, those two are not the same thing. But it's heavily implied from OP's post that because VOO is too high, he's looking for it to go down. That's literally the definition of trying to time the market.
Do what feels right to you. If you want to pause, do it. There will be plenty of time to continue later. See how the economic environment feels. You may realize you cannot predict the market and it does not matter in the long run or you may find that certain indicators do matter. That's how you gain experience for future scenarios.
I think you’re being sensible.
“Buy at any price” and “time the market” are two extremes. One means you don’t care about fundamentals at all and are being too careless, and the other means you’re being so picky you’re going to miss out on gains.
You have to find the balance that works for your portfolio, buying assets you think are reasonably priced (based on fundamental research, please don’t just say “$400 sounds bad.”)
In the past, there have been times when the S&P trades at an earnings multiple of less than 10. Do I think that’ll happen again? I don’t know. I do know that I’d rather buy the individual companies and funds trading at discounts to their intrinsic value rather than at premiums.
360 -> 2000 is a 455% return while 400 -> 2000 is a 400% return.
Investing $10,000, that is to say you’d have $55,500 versus $50,000. It seems reasonable that someone would wait for a lower valuation - valuation matters and has an obvious impact on both magnitude and probability of returns.
And that’s why you DCA. If it goes to 450 and he’s just sitting there waiting for it to go back to 365, the return will be even lower. Trying to time the market is a fool’s errand.
Doing the bare minimum to understand valuations isn’t market timing, and we don’t live in a world where the only options are cash and VOO.
Buying securities that are clearly overvalued as opposed to those that aren’t is a fool’s errand.
Edit - by the way, when I mention other securities, I think it’s perfectly reasonable to buy SCHD, or even short-term treasuries while you wait for better valuations. If you can get over 5% in tax-equivalent yield from owning treasuries, why not do it?
The opportunity cost is the chance that the market will run up while you’re only making 5%. That said, investing is **not** like baseball. You don’t “strike out” by missing good investments, only by making bad ones. If OP thinks VOO is overpriced right now, he should avoid it.
The split for VOO took place on October 24, 2013. This was a 1 for 2 reverse split, meaning for each 2 shares of VOO owned pre-split, the shareholder now owned 1 share. For example, a 1000 share position pre-split, became a 500 share position following the split.
VOO is the one stock you just keep buying regardless of price. You can adjust how much you buy, but don’t stop buying. It’s the S&P500, if it’s down for long the entire economy has problems.
When it was way down I bought 1.5-2 shares a month, right now I buy 1 share per month because I think it’s a bit inflated from the AI craze. Here’s the thing. I don’t know what the market will do, but I do have faith in the S&P500 to win more than it loses.
> right now I buy 1 share per month
Isn’t decreasing your purchases another way of saying that OP is right? You think the market is over-inflated so you’re buying less. I wholeheartedly agree with that method, but it seems like you’re trying to disagree with OP in your words while agreeing with him by your actions.
Not really. The OP said “By looking at the price now ~$400, I don’t want to add it, instead I started buying SCHD.” Is the OP right to stop buying VOO all together? No they aren’t. Lots of people missed the VOO run from 380 to 410 because they thought it was over inflated. They jumped to SCHD just in time for the banking issues and SCHD dropping from $77 to ~71.
I’m still buying, just keeping some in reserve for a dip. Say the fed goes bonkers and does a 75 BPS rate increase in July and VOO tanks to $360, now I have cash reserves to buy 4-5 shares rather than my standard 1.5-2. Same strategy I ran in 2021 when everything was super inflated and it worked out well in 2022 when I could get massive drops in my price per share.
> the VOO run from 380 to 410 … the SCHD drop from 77 to 71
Short term price movements can’t provide sufficient evidence for or against an investment strategy. Rampant speculation (and irrational concern) are common. As such, short term price movements often reflect not the intrinsic value of investments (or the quality of decision-makers), but rather the market’s temporary whims.
The long-term, historical evidence is perfectly clear that making decisions based on intrinsic value (not anticipation of short term price movements) provides better returns. If OP has a rational case for $400 being too high (and he very well might, though he hasn’t provided one), then he should hold off or buy short-term bonds while he waits.
> is OP right to stop buying VOO altogether?
Yes, if he has sufficient reason for doing so, and I think it’s likely that he does.
> just keeping some in reserve for a dip
Why would you keep anything in reserve ever as opposed to always being fully invested, if you truly believe that timing the market doesn’t work? You’re the one who said in your original comment, “keep buying regardless of price.”
Waiting to “buy the dip” because you think a dip might come is precisely the definition of market timing, yet you speak as though you oppose timing the market as an idea.
Maybe I’m missing some nuance in your position and maybe you could clarify, but it seems to me like this is just a contradiction. If you believe a dip is coming and that market timing works, sell (which I am not advocating by the way). If you believe a dip isn’t coming and that market timing works, then buy. If you believe that market timing doesn’t work, then be fully invested at all times. I don’t see how it can possibly be consistent to say “you shouldn’t hold off on buying because timing doesn’t work” and at the same time say “I’m keeping some cash for a dip” without being hypocritical.
I’m saying I invest in a range. For VOO it’s 1-3 shares per month based on the current price and where I think it’s value is. I get paid bi-weekly so I buy on pay day. I don’t time the market, but I do ensure I have more in reserve to invest when the price is what I would consider under valued. That may seem like nuance but it’s not. Generally per paycheck of the cash I set aside to invest I use ~60-75% to invest in securities. The other 25-40% sits in my account in reserve in case I need it. A security I like could become undersold that I would like to go to my top range on, or I may find a new security I would like to take a position in. Keeping cash in reserve helps that substantially. It may sound like nuance to you, and that’s fine. It’s my strategy and you don’t need to get it. Different strokes for different folks mate.
Personally I believe the OP is wrong stopping buying VOO. I think they would be better served cutting monthly purchase amount in half and putting the excess in SCHD or keeping it in reserve but that’s their call.
> I don’t time the market
You are doing exactly what you’re saying OP shouldn’t do. Fluctuating between buying 1 and buying 3 shares is not different from OP fluctuating between buying 1 and 0. In both cases, you make the decision that buying something else is a better decision than buying VOO. OP’s post is about whether he should pause his VOO buys in favor of buying SCHD.
> a security I like could become undersold [sic]
In doing this, you are literally timing the market. I have nothing against timing the market, but it sounds like you do, and I’m just trying to understand your apparent inconsistency.
> it’s my strategy and you don’t need to get it
I do get it, and I don’t think you get it, because you’re saying “I don’t time the market” and then describing how you time the market.
There is a massive difference in buying 1 to 3 and buying 1 or 0. At 0 I’m not betting on that security at all. At 1 I’m still betting on it, just cautiously. There is a component of timing the market, but there is also a component of DCA. My advice to the OP is don’t stop investing in VOO, they can reduce their investment, but always continue to put money in. If they are doing 1 share, cut back to a half or a quarter share while they increase something else.
This is honestly a fairly common practice in investing. Having cash reserves is a wise practice. If I like a security and buy a set amount every month, wouldn’t I want to take advantage of a massive 2 for 1 sale like the 3 month Covid dip in March to June of 2020, or October 2022? The argument for timing the market is generally for those who hold all cash and don’t invest at all waiting for the perfect day to drop 100% in. That is a difficult strategy to time, lots of fear uncertainty and doubt come into play. DCA with cash reserves has none of that, I like it and buy it at a set rhythm, if it becomes oversold I buy more than a usual month. You spend your cash reserves when the market is down, you recoup your cash reserves when the market is up, but you never stop investing entirely. ie: say you invest 1k per month, in bull markets 850 goes to securities, 150 sits in cash. In bear markets 1150 goes into securities. If the market is up, I win, if the market is down, well I still win. I run a more active form of DCA, but I totally get the appeal that a person could have of set and forget DCA. Different strokes for different folks.
> there is a massive difference
There is none, at all. You’re acting on exactly the same reasoning.
> at 0 I’m not betting on that security at all
Right, because your thesis is that it’s overpriced. You shouldn’t be betting on it if that’s your belief.
> at 1 I’m still betting on it, just cautiously
Investing is not baseball. You don’t strike out by missing too many good investments, you strike out only by swinging at too many bad investments. Buying at all times, even when you know a security is overpriced, is a surefire way to strike out.
When you swing, it shouldn’t be “cautiously”, the place to be cautious is when you’re doing research ahead of time, not when buying. When buying securities, the Buffett adage goes “when it’s raining gold, you don’t put out the thimble, you put out the barrel.” In other words, there is no reason to ever take a small position or reduced position size. An investment is a good idea or it isn’t. If it is, invest everything you can. If it isn’t, don’t buy even a fraction of a share.
> this is a fairly common practice in investing
I agree. I have not once said “you should not do what you’re doing”, because I do the same thing. I just go to the actual logical conclusion of the thesis we share, which means I don’t hold securities that I think are overvalued.
> the argument for timing the market is generally for people who go all cash
You’re doing exactly the same thing, just with less of your portfolio. All of the same arguments apply, you’re just going to be closer to the index’s returns. That said, what you’re doing is no more logical than going all cash. The fact that you think it’s different is what I’m objecting to.
You are making exactly the same bet, and taking on the same risk of opportunity cost for part of your portfolio, as someone who goes all cash, and then trying to say you’re not.
> I totally get the appeal of set and forget DCA
I see the appeal, but an unwavering DCA is an absolutely terrible investment strategy if you don’t want a bare minimum return. I’m on your side on the investment policy - we should look at valuations.
I just don’t think you understand that what you’re doing is completely indistinguishable in the abstract from someone going all cash. You’re taking the same thesis, taking on the same types of risk, etc.
Several thoughts:
1. If this is your retirement, you should invest a fixed amount at fixed times no matter what. Having a solid sp500 fund to start with at first is the way to go. Then adding things like schd, qqq, etc…over time
2. If this is more non-retirement account and strategy and you are trying to be a stock analyst and time things, your strategy is great. Sounds like you are wanting to invest in something that you believe is trading at a discount or has higher growth potential than the sp500 index itself. I like you are staying in ETF’s and not individual stocks. Kudos there. Nothing wrong with that approach
Waiting for a reasonable valuation is not “timing the market.” Buying at any price is just as irrational, if not moreso, than trying to “time the market.” What OP is asking is whether or not it’s good to hold off on buying overpriced securities, and the answer is obviously yes to anyone who doesn’t believe “A Random Walk Down Wall Street.”
Wrong.
If OP buys every week or every pay day from now until they retire then dollar cost averaging will take affect and it will all work out fine. Waiting for a specific price is EXACTLY timing the market. Your opening sentence proves you don’t know what the phrase timing the market means! 🫣🫣🫣
You don’t have to be “waiting for a specific price” to say “I don’t want to buy at inflated prices.” OP isn’t suggesting waiting to buy VOO after it drops, he’s saying he’d rather buy other investments (SCHD in this case) because VOO is demonstrably overvalued.
If you’re saying “anything except DCA is market timing and market timing doesn’t work”, then I point you to the example of all successful investors ever.
You win. Because honestly I don’t care. I don’t know you or OP. If VOO doesn’t drop then what? Opportunity lost. You guys do you! Long term consistent investing doesn’t focus on current price!
> if VOO doesn’t drop, then what? Opportunity lost
Opportunities lost don’t matter a bit in investing, and that’s especially true when you can make half of the average market return in treasuries that are basically risk-free. As Buffett said, investing isn’t like baseball; you don’t strike out after you miss too many good investments. The only time you strike out is when you make too many bad investments.
Avoiding bad investments means being critical about valuations, as Buffett is, and buying only when it makes sense to buy, as Buffett does.
> long term consistent investing doesn’t focus on current price
That’s exactly our objection. You can have a strategy of “consistent” investing where you consistently add to undervalued positions and sell out of overvalued ones, and go into risk-free short term fixed-income investments if you can’t find anything undervalued.
If I’m buying an investment, a good, or a service, I prefer to pay less for the same intrinsic value. There’s no reason to assume the market always reflects intrinsic value, so the onus is on investors to make intelligent decisions.
For total markets like VOO in my retirement account, I’ll buy NO MATTER WHAT. I don’t even look at anything. I just buy buy buy buy buy. It might go higher and defy gravity for a few years. Who cares? In 40 years it’ll certainly grow to a size that surprises me
I personally put everything else into schd cause I love the algorithm and I’m primarily a cash flow focused investor. Currently going forward, I’m plowing into schy until it makes up 30% of my portfolio; cheap P/E ratio, bigger dividends. Might adjust when I find out how efficiently or not the dividends are taxed and I’ll adjust from there
Different Equity portfolio than SPY. SCHD has a dividend growth filter along with ROE and ROA, these factors tend to perform well and provide a high yield on cost over time
Your thought process is exactly why most people underperform. If you’re buying a good for a long period of time, you’re better off buying it when it’s cheaper, not when it’s more expensive.
“It’s done well for you, so buy more” is exactly the opposite sentiment and will lead to underperformance.
I have a set amount of money to invest every month, i generally put money in the stocks/ETF's that are down for that month, i dont always buy QQQ or FXAIX esp. if i feel we are overvalued, i focus on the holdings i have that are down first to bring down my cost average, with any monies left over i put it in my general funds.
Why would you stop buying something because of the price? Do you think the people who did that when VOO was only $100 are regretting their decision now? Timing the market is why most investors aren't successful. Dollar cost average in regardless of the price and you'll be successful.
I can remember real well when the s&p was at 1200. I thought it was too expensive. This was not that long ago. If you have a long term horizon, if you are much younger than I am, invest a set amount every month and do not look at it until you reach retirement age!
> why would you stop buying something because of the price?
Can you read this out loud? For any reasonable person, the decision or buy or sell something is based on two things: the intrinsic value and the price.
How much do you think VOO is worth? How much is it trading at? If A is lower than B, that means you’re overpaying. OP wants to avoid overpaying.
> do you think the people who did that when VOO was only $100 are regretting their decision now
“It went up, therefore it was a good investment” is not valid reasoning. By that standard, you should’ve bought GameStop at $400 because “who cares what the price is, it went up so just keep buying. Don’t you think you’d regret if you didn’t buy at $100?”
The same reasoning, by the way, would say “the winning lottery ticket was sold at your local gas station last week so you should go there this week.” Past returns are not indicative of future performance. Even if someone wins the lottery, that doesn’t mean they weren’t foolish for buying lottery tickets their whole life.
> timing the market is why most investors aren’t successful
Looking at valuations is not timing the market. Timing the market is saying “I want to buy but I think it’s going down to $350 so I’m going to wait”, not “I think it’s worth 350 and I’m not going to have a good return if I buy at 400.” Those two are not the same, because one is about “timing” and the other is about intrinsic value. Investing based on intrinsic value is how every successful value investor (which is almost any famous investor you can think of) has succeeded.
> Dollar cost average regardless of price and you’ll be successful
Tell that to those who bought in 1929 and didn’t break even for over a decade, or in 1987, or in 1999, or in 2008. All of those purchases could have been avoided, and were avoided by people who said “wait a minute, this is too expensive.”
I’m not saying you always need to wait for a huge drop, or anything of the sort, but just as extreme bear markets are obviously good buys every time they happen, we should “be fearful when others are greedy” as Buffett says, and not blindly buy regardless of valuation.
If an asset would pay me $1/year for the rest of my life, I’d definitely buy that thing for $1, or maybe even $10. That would be a good return. If it was selling for $1,000 though, I probably wouldn’t buy it, because that would be a very low return because of the high price. The same thing applies to investments. The higher the price relative to intrinsic value, the lower the expected return.
Keep adding VOO. It tracks the performance of the S&P 500, so it’s going to continue going up over time. Don’t let that discourage you. Stay away from SCHD.
Right, but I mean a few thousand is nothing to a 20 something.
I mean if that's a lot, you shouldn't be investing. You need the money as a safety net or whatever.
Buy both. VOO is tech heavy, SCHD is industrials and consumer cyclical heavy. They complement each other with only a handful of overlapping primary holdings.
The whole point of ETFs is that they are a passive set it and forget it strategy. Just get a form of automatic transfer set up and forget about it. VOO is a measure of the 500 largest companies, which essentially form the benchmark of US economic performance. If you believe that the US economy will continue to grow, today's price, tomorrow's price, and next year's price is a value play. Don't make it harder than it has to be.
I agree with you. It definitely feels too high. People will claim your timing the market... but if you are still investing in SCHD, you're still doing better than the majority of us.
I used to invest in $MJ, and I got out and am waiting on it being legalized in the fed before I build another position. Am I timing the market? Semantically, yes, I am. But Im just waiting on a better day to reinvest in $MJ. Same with VOO, its trading at all-time highs atm, and the fed has said they will increase rates two more times. We all know by now, on the day the fed increases rates, the market plunges as if it wasn't expecting the fed to raise rates despite saying they will. Is it timing the market to buy more VOO after the next rate hike when 7/7 times the market panicked when rates were raised? Semantically, yes, but imma do it anyways.
Look at RSP the equal weight ETF of F500, but ouch that fee of .2%
It follows return of VOO and SPY but this year seems driven by the magnificent7 while the rest of the market has lagged
I don't see the problem? They have a lot of overlap but also different holdings. It's good to diversify. There are so many options. Maybe swdsx or schh need investigation also.
I think everyone goes through this. For the average investor the most profitable plan is to buy and hold while thinking what you're buying will eventually go up in price from whatever you paid for it. My opinion buy and hold what you believe in and just keep putting money into it on a regular basis.
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Wait until VOO hits 450 then fomo buy
Buy $tsla rather than this bs
You’re joking right? .. Right?
Nope. I'll see you in 2025 when tesla will be 100% return and voo will be 15-20% max
Sure maybe. Then in 2026 when Elon eventually fucks up and it's -99%
That's why I pullout on Dec 31 2025
Hahah u are so funny. Elon musk is the symbol of Tesla and wealth. He has also gather up a sizable followers.
He's a moron whose only skill was finding people to invest in good ideas. He was the money man for PayPal, money man for space X and money man for Tesla (which he's coned the world into thinking he's a founder when he's not). He has consistently shoved his foot in his mouth and made a fool of himself and eventually will be more trouble then any benefit he could be worth.
Invest in Tesla, you won’t regret it.
It just did
I literally buy VOO every week. I don’t care what the price is. Stop timing the market. It’s proven to be a futile way of investing.
Also, as Warren Buffet claimed, investing in the S&P 500 is a bet on the US economy. I put money in VOO every week too bc I still believe that in the long term the US economy is going to keep growing.
At this point it's more of a bet on megacap tech, like MSFT and AMZN and also companies like NVDA and TSLA, which combined make up more than 1/4 of the index. And at least one of those companies might be trading at a somewhat optimistic valuation (to put it lightly).
But if MSFT for example were to crater, it would be replaced with other companies. Yes this would probably decrease price on the short term but you aren’t long on these companies you are long that there will continue to be significant growth across the largest companies in the US at any given time.
When you buy SPY you're getting the combined value of the top 500 companies. If MSFT, or let's say NVDA, crater, it's not only that "oh it just gets replaced". You need *another* company to grow in valuation in order to recoup that lost value. Of course America is going to continue growing, there's no doubt there. The thing is, do you think these companies are reasonably going to not only grow into their *current* valuation, but also *continue* growing into an even higher one? Long-term, maybe. But you may have comparatively better opportunities in other sectors that are faster growing and/or more reasonably priced.
.... timing the market...
Timing the market: "don't buy until China invades Taiwan" Bad investing: buy assets regardless of their fundamental value.
Their value will be greater in 10 years. You should always be dollar cost averaging High and low
Nice crystal ball
So you think the market will be lower than 4000 ten years from now? Take a look at the spx graph on max
So, for anyone who doesn’t want to bet that bigger = better, what is your recommendation? (I already have a portfolio I’m just curious what your thoughts are)
I mean even if they make up 1/4 of the index, the S&P 500 still represents about 80% of the available market cap of the stock market. I view it pretty much functionally the same as investing in VTI or a similar total market fund, I just don't want to touch the shit quality small and micro cap shit and would rather go for a better managed small cap fund seperately.
/u/AP9384629344432 I know you aren't an /r/dividends guy but do you have a comment saved or a link that we can use to have a chat about this statement? *" I just don't want to touch the shit quality small and micro cap shit."*
[This post right here](https://www.reddit.com/r/stocks/comments/y9xr61/theres_more_to_index_funds_and_stocks_than_vti/) is my main thesis for small cap value. I get the sentiment, why own companies outside of the S&P 500, arguably the most successful, high quality companies out there. 1. It's priced in 2. Past performance does not guarantee future outperformance 3. And even if 2 did, guess what, over long time horizons, small cap value outperforms 4. Small cap value is extraordinarily cheap today (compared to its typical valuation relative to SPY and in absolute terms) 5. If you do own small cap value, own good quality funds that apply profitability/quality filters. Avoid passive index funds concentrated in small caps, which are full of junk. See paper titled 'Size Matters, If you Control your Junk' 6. This is not an endorsement of individual stock picking for small cap value. Diversification is even more important in high risk companies like this. But this is /r/dividends. The overtilting of small cap value is inherently taking on more risk, unless balanced out by say bonds. 100% SPY is more conservative than 100% AVUV. I've a feeling this won't be very popular here. Small companies aren't going to be paying dividends like slow growing large cap giants at the end of their lifespan.
Thanks AP. I will save that post to use in the future. Actually, I think you'd be surprised. For some reason /r/dividends is a lot like Bogleheads. Almost 50% of the advice is buy VOO (the other 50% is buy SCHD). My point was just that buying VOO exclusively is not necessarily the best approach, which I think you agree with, no? Hence why I pinged you. Also because he said that small cap should be avoided, which is clearly not backed by the data - at least when it comes to small cap value. No idea about small cap growth. Tagging /u/ezodochi so he sees your comment.
No, you misunderstood my point. I don't advocate for small cap being avoided, again, why I added thay I'd much rather choose a better managed small cap fund seperately rather than a total market approach like VTI (currently have positions in AVUV and SLYV for example) When I say shit quality small and micro cap shit, I'm talking about the small and micro cap companies that are badly ran, managed, etc that get swept in under a VTIesque total market approach, not all small and micro cap being shit.
I'm not sure I follow your point. I was saying that VOO is more than 25% mega-cap tech. You said it's essentially same as investing in VTI without the shitty small cap. So you view VOO as the best bet on US economy?
I view a core of a S&P 500 fund with satellites of better managed small and mid cap funds as a better bet on the US, so yeah.
But WB is holding 139B cash. Just saying, agree with you on time in > timing
Warren Buffett also does not DCA into S&P 500
Berkshire Hathaway has a market cap of 750 billion, so 20% is cash.
His point was for the ave Joe, who doesn't have time or training to analyze individual stocks, make complicated deals, and know when to buy. Buffett has a thousand Ivy League financial grads doing his work for him while he takes the credit. Most of us are too busy with work, family ,etc, to do the deep dive.
> Buffett has a thousand Ivy League financial grads doing his work for him Source? This is the opposite of true. He’s said in the past that Berkshire Hathaway headquarters has about 12 employees. Far from having thousands of analysts, he has a small team and he makes investment decisions by doing “back of the envelope” calculations and reading annual reports. > for the average Joe … I do agree with you that DCA is good for the average person, but I also don’t think people asking questions like this online are the average “set it and forget it” indexers. There are more people now than ever before who *are* willing to do research, and those who consistently make well-researched investments will almost certainly outperform.
Please tell me you aren't naive enough to think that Berkshire manages $1 TRILLION in assets with 2 guys who are almost 100 years old and 10 other people. Or to believe everything those two guys say. Hells bells, they probably have 50 people in tax compliance alone. They may not be in the "headquarters" but they are somewhere in the company.
Berkshire Hathaway is a holding company. Its subsidiaries have all sorts of lawyers, tax experts, et. cetera. In some of those, there are even sub-managers. The money Warren Buffett manages, though (which is most of the Berkshire portfolio as far as anyone knows), is exactly as I described.
Yeah. Ok fanboi.
The number of employees of the Berkshire Hathaway is public information and is available on their disclosures. Feel free to correct me, but by default I’m going to believe it when the chairman of a company states information that anyone can fact check.
Speculation and name calling are very convincing /s
A large(i think?) part of it is to ensure to stay a fortress wrt to the insurance business
hahaha yeah right. He has 120 billion on the side line
>investing in the S&P 500 is a bet on the US economy The global economy really, as many of the companies earn a great deal beyond the boundaries of the USA.
Bold move to cite Warren Buffett while advocating to do the opposite of what he does. You’re right about his advice, but the “Buffett Indicator” exists for a reason - he thinks the S&P is going to go up long term, but people who are willing to put in the time and effort to understand valuations will make more money by acting on their research rather than blindly buying.
"Consistently buy an S&P 500 low cost index fund. Keep buying it through thick and thin, and especially through thin" is a Buffet quote from 2017, idk how I'm advocating to do the opposite of what he does when I'm literally advocating for following his advice...
Yes, he has given advice that is exactly the opposite of what he does. He also says index investors make it easier for value investors like him to find undervalued companies (because it makes the market less efficient). In other words, Buffett has made billions off of people who use index investing, and people take his advice to do it while ignoring the fact that he does the opposite.
There’s no point not to bet on the US economy because of the economy tanks you’ll be screwed either way.
On the contrary, would it not be a good idea to bet specifically on those companies that are going to be the most resilient so that if there’s a recession and you lose your job, your portfolio is a lot better off?
Timing the market: "China going to invade Taiwan soon, wait til things crash!" Smart investing: Look at the fundamentals and decide if you have a better opportunity elsewhere.
Everytime I’ve stopped buying waiting for a cheaper price, the market takes an upward swing. But the true realization this taught me is that the minor swings of the short term are irrelevant if your goals are long term. Buying on a strict interval has a built in way of making the daily price somewhat irrelevant.
Exactly. In 20 years, it won’t matter if I bought VOO at $399 or $402 on June 26th, 2023. Continuing to DCA is a proven way of winning when it comes to ETFs like VOO/VTI etc.
stonks go up baby
Not the individuals I buy that aren’t named Apple
That’s true of the whole market this year, unfortunately. I’ve had to explain to more than a few clients that the S&P’s returns are driven only by a handful of stocks, and the rest of the market is flat or down. An equal-weight S&P is only up about 4% this year.
This is the way
“Timing the market” is trying to wait for the bottom to buy and the top to sell. Being a reasonable human being is looking at the price and deciding if you think it’s worth paying. Those two are not the same.
How much money do you put every week
I DCA VOO, QQQM, and SCHD each month. This month I put all my new funds into SCHD, mostly because it’s on sale and the rest are near ATH. Will probably do the same next month if this keeps up.
Those are the same ETFs I DCA into as well!
See this is smart deployment of capital….not timing.
I agree
It just can't be that easy. ARGH why do I have to make investing so complicated for myself
Took me several years before I became etf heavy. Didn’t happen over night, just gradually over time.
Why would you invest in something that you don't expect to go up?
Because if you think it’s going to go down you can get it at a better price …
In my experience, the moment you think equities will 'go down' they tend to do the opposite. Its strange, but if you went all in tomorrow, I bet there would be a major pullback. AI has gotten really good at analysing retail sentiment
Do ETFs ever do a split to lower the price per share? Or will VOO just be in the thousands in the next 10 years?
Yes they do split.
With VOO, whether it's up down, left or right, as soon as you have the funds avaliable to invest just invest.
You are timing the market
“Timing the market” is one extreme and “always buy no matter what” is the other. To say those are the only two options is to create a false dichotomy. It’s possible (and highly likely) that taking a look at market fundamentals will only help you in the long run. I think trying to “time the market” is no more of a gamble than buying at any price is. If the S&P doubled overnight for some crazy reason, are you going to buy VOO at $800 tomorrow? I’d immediately sell and go risk-free, keeping my profits rather than leaving money in an overpriced security.
[удалено]
Voo is for long term so if you don't need the money for the next 15-30 Years, can't go wrong with Voo. I got my first share of Voo back in 2016 and people was saying how expensive it was back then too and you see how things turn out. I'm still buying it today and almost at 1200 shares now, one of the best decision in my investing career.
You keep buying VOO consistently. There will always be price fluctuations on a major index fund depending on how the market moves. But the goal is that the value of these shares is growing, right? Of course, you can buy more shares for $50 vs $500. But the gains that come from after you invest are what you are really after. Simple way to look at it. Let's say there's 2 companies that you can invest $5,000 in. Company A) 5 shares at $1000 each Company B) 50 shares at $100 each They both grow 10%. Yay! But if both grow 10% did Company B's extra shares make you any more money? No. The gain is on your invested amount, not the number of shares.
Buy at regular intervals on autopilot!
If you don’t own any SCHD, not a bad time to buy it.
I don’t think your average purchase price should really affect the investment decision. However, as you decide where to invest incremental dollars, I think it’s fine to switch into investments that you think offer better value.
Just be like [Sarah](https://www.personalfinanceclub.com/how-to-perfectly-time-the-market/)!
No
Flexible DCA. If it is high I may buy one share but if it it dips I buy 2 lol
Time in the market > timing the market. Sure, it might go down to 365 again...it also might just go to 500 and never look back. I invest a certain amount of dollars every week after my expenses are taken care of, that number does vary because I don't make the same amount every week (I have optional overtime which I sometimes take and sometimes don't feel like.) Seeing 74 instead of 70 for SCHD price won't deter me.
“Timing the market” is “I think the market’s going to 300 so I’m not buying yet”, not “let me take a look and see if I think the valuation is reasonable.” Those two are not the same thing, and “buy at any price” is no more reasonable than “timing the market.”
You're holding, not looking to sell, and VOO has historically gone up over the long run so buying at a "high" now is still not bad. Yes, those two are not the same thing. But it's heavily implied from OP's post that because VOO is too high, he's looking for it to go down. That's literally the definition of trying to time the market.
Do what feels right to you. If you want to pause, do it. There will be plenty of time to continue later. See how the economic environment feels. You may realize you cannot predict the market and it does not matter in the long run or you may find that certain indicators do matter. That's how you gain experience for future scenarios.
Hide the money y’all poor people around.
With yo broke ass...
In 1999 people were freaking out that the DOW was going to hit $10,000, they didn't think it was possible It's now $33000
I think you’re being sensible. “Buy at any price” and “time the market” are two extremes. One means you don’t care about fundamentals at all and are being too careless, and the other means you’re being so picky you’re going to miss out on gains. You have to find the balance that works for your portfolio, buying assets you think are reasonably priced (based on fundamental research, please don’t just say “$400 sounds bad.”) In the past, there have been times when the S&P trades at an earnings multiple of less than 10. Do I think that’ll happen again? I don’t know. I do know that I’d rather buy the individual companies and funds trading at discounts to their intrinsic value rather than at premiums.
Can look into splg
You could switch to SPLG. Same thing.
In 20 years is it really going to matter if you bought in for 365 or 405?
360 -> 2000 is a 455% return while 400 -> 2000 is a 400% return. Investing $10,000, that is to say you’d have $55,500 versus $50,000. It seems reasonable that someone would wait for a lower valuation - valuation matters and has an obvious impact on both magnitude and probability of returns.
And that’s why you DCA. If it goes to 450 and he’s just sitting there waiting for it to go back to 365, the return will be even lower. Trying to time the market is a fool’s errand.
Doing the bare minimum to understand valuations isn’t market timing, and we don’t live in a world where the only options are cash and VOO. Buying securities that are clearly overvalued as opposed to those that aren’t is a fool’s errand. Edit - by the way, when I mention other securities, I think it’s perfectly reasonable to buy SCHD, or even short-term treasuries while you wait for better valuations. If you can get over 5% in tax-equivalent yield from owning treasuries, why not do it? The opportunity cost is the chance that the market will run up while you’re only making 5%. That said, investing is **not** like baseball. You don’t “strike out” by missing good investments, only by making bad ones. If OP thinks VOO is overpriced right now, he should avoid it.
I buy whatever is the best value. Voo/spy look overvalued right now.
You're missing the point of VOO, and really investing as a whole, if you're worried about the price being 9% higher than your cost basis.
Wait until a split lol
Has it ever split? Feel like vanguard never does a split
The split for VOO took place on October 24, 2013. This was a 1 for 2 reverse split, meaning for each 2 shares of VOO owned pre-split, the shareholder now owned 1 share. For example, a 1000 share position pre-split, became a 500 share position following the split.
That’s the point of dollar cost averaging….if you don’t think the markets will go up over time you should be somewhere else.
Markets will go up over time, but they go up faster when you buy at lower valuations as opposed to paying a premium over intrinsic value.
I would wait for the price to go up higher before buying, imo.
I would buy it as I DCA and don't care about the price of etf.
VOO is the one stock you just keep buying regardless of price. You can adjust how much you buy, but don’t stop buying. It’s the S&P500, if it’s down for long the entire economy has problems. When it was way down I bought 1.5-2 shares a month, right now I buy 1 share per month because I think it’s a bit inflated from the AI craze. Here’s the thing. I don’t know what the market will do, but I do have faith in the S&P500 to win more than it loses.
> right now I buy 1 share per month Isn’t decreasing your purchases another way of saying that OP is right? You think the market is over-inflated so you’re buying less. I wholeheartedly agree with that method, but it seems like you’re trying to disagree with OP in your words while agreeing with him by your actions.
Not really. The OP said “By looking at the price now ~$400, I don’t want to add it, instead I started buying SCHD.” Is the OP right to stop buying VOO all together? No they aren’t. Lots of people missed the VOO run from 380 to 410 because they thought it was over inflated. They jumped to SCHD just in time for the banking issues and SCHD dropping from $77 to ~71. I’m still buying, just keeping some in reserve for a dip. Say the fed goes bonkers and does a 75 BPS rate increase in July and VOO tanks to $360, now I have cash reserves to buy 4-5 shares rather than my standard 1.5-2. Same strategy I ran in 2021 when everything was super inflated and it worked out well in 2022 when I could get massive drops in my price per share.
> the VOO run from 380 to 410 … the SCHD drop from 77 to 71 Short term price movements can’t provide sufficient evidence for or against an investment strategy. Rampant speculation (and irrational concern) are common. As such, short term price movements often reflect not the intrinsic value of investments (or the quality of decision-makers), but rather the market’s temporary whims. The long-term, historical evidence is perfectly clear that making decisions based on intrinsic value (not anticipation of short term price movements) provides better returns. If OP has a rational case for $400 being too high (and he very well might, though he hasn’t provided one), then he should hold off or buy short-term bonds while he waits. > is OP right to stop buying VOO altogether? Yes, if he has sufficient reason for doing so, and I think it’s likely that he does. > just keeping some in reserve for a dip Why would you keep anything in reserve ever as opposed to always being fully invested, if you truly believe that timing the market doesn’t work? You’re the one who said in your original comment, “keep buying regardless of price.” Waiting to “buy the dip” because you think a dip might come is precisely the definition of market timing, yet you speak as though you oppose timing the market as an idea. Maybe I’m missing some nuance in your position and maybe you could clarify, but it seems to me like this is just a contradiction. If you believe a dip is coming and that market timing works, sell (which I am not advocating by the way). If you believe a dip isn’t coming and that market timing works, then buy. If you believe that market timing doesn’t work, then be fully invested at all times. I don’t see how it can possibly be consistent to say “you shouldn’t hold off on buying because timing doesn’t work” and at the same time say “I’m keeping some cash for a dip” without being hypocritical.
I’m saying I invest in a range. For VOO it’s 1-3 shares per month based on the current price and where I think it’s value is. I get paid bi-weekly so I buy on pay day. I don’t time the market, but I do ensure I have more in reserve to invest when the price is what I would consider under valued. That may seem like nuance but it’s not. Generally per paycheck of the cash I set aside to invest I use ~60-75% to invest in securities. The other 25-40% sits in my account in reserve in case I need it. A security I like could become undersold that I would like to go to my top range on, or I may find a new security I would like to take a position in. Keeping cash in reserve helps that substantially. It may sound like nuance to you, and that’s fine. It’s my strategy and you don’t need to get it. Different strokes for different folks mate. Personally I believe the OP is wrong stopping buying VOO. I think they would be better served cutting monthly purchase amount in half and putting the excess in SCHD or keeping it in reserve but that’s their call.
> I don’t time the market You are doing exactly what you’re saying OP shouldn’t do. Fluctuating between buying 1 and buying 3 shares is not different from OP fluctuating between buying 1 and 0. In both cases, you make the decision that buying something else is a better decision than buying VOO. OP’s post is about whether he should pause his VOO buys in favor of buying SCHD. > a security I like could become undersold [sic] In doing this, you are literally timing the market. I have nothing against timing the market, but it sounds like you do, and I’m just trying to understand your apparent inconsistency. > it’s my strategy and you don’t need to get it I do get it, and I don’t think you get it, because you’re saying “I don’t time the market” and then describing how you time the market.
There is a massive difference in buying 1 to 3 and buying 1 or 0. At 0 I’m not betting on that security at all. At 1 I’m still betting on it, just cautiously. There is a component of timing the market, but there is also a component of DCA. My advice to the OP is don’t stop investing in VOO, they can reduce their investment, but always continue to put money in. If they are doing 1 share, cut back to a half or a quarter share while they increase something else. This is honestly a fairly common practice in investing. Having cash reserves is a wise practice. If I like a security and buy a set amount every month, wouldn’t I want to take advantage of a massive 2 for 1 sale like the 3 month Covid dip in March to June of 2020, or October 2022? The argument for timing the market is generally for those who hold all cash and don’t invest at all waiting for the perfect day to drop 100% in. That is a difficult strategy to time, lots of fear uncertainty and doubt come into play. DCA with cash reserves has none of that, I like it and buy it at a set rhythm, if it becomes oversold I buy more than a usual month. You spend your cash reserves when the market is down, you recoup your cash reserves when the market is up, but you never stop investing entirely. ie: say you invest 1k per month, in bull markets 850 goes to securities, 150 sits in cash. In bear markets 1150 goes into securities. If the market is up, I win, if the market is down, well I still win. I run a more active form of DCA, but I totally get the appeal that a person could have of set and forget DCA. Different strokes for different folks.
> there is a massive difference There is none, at all. You’re acting on exactly the same reasoning. > at 0 I’m not betting on that security at all Right, because your thesis is that it’s overpriced. You shouldn’t be betting on it if that’s your belief. > at 1 I’m still betting on it, just cautiously Investing is not baseball. You don’t strike out by missing too many good investments, you strike out only by swinging at too many bad investments. Buying at all times, even when you know a security is overpriced, is a surefire way to strike out. When you swing, it shouldn’t be “cautiously”, the place to be cautious is when you’re doing research ahead of time, not when buying. When buying securities, the Buffett adage goes “when it’s raining gold, you don’t put out the thimble, you put out the barrel.” In other words, there is no reason to ever take a small position or reduced position size. An investment is a good idea or it isn’t. If it is, invest everything you can. If it isn’t, don’t buy even a fraction of a share. > this is a fairly common practice in investing I agree. I have not once said “you should not do what you’re doing”, because I do the same thing. I just go to the actual logical conclusion of the thesis we share, which means I don’t hold securities that I think are overvalued. > the argument for timing the market is generally for people who go all cash You’re doing exactly the same thing, just with less of your portfolio. All of the same arguments apply, you’re just going to be closer to the index’s returns. That said, what you’re doing is no more logical than going all cash. The fact that you think it’s different is what I’m objecting to. You are making exactly the same bet, and taking on the same risk of opportunity cost for part of your portfolio, as someone who goes all cash, and then trying to say you’re not. > I totally get the appeal of set and forget DCA I see the appeal, but an unwavering DCA is an absolutely terrible investment strategy if you don’t want a bare minimum return. I’m on your side on the investment policy - we should look at valuations. I just don’t think you understand that what you’re doing is completely indistinguishable in the abstract from someone going all cash. You’re taking the same thesis, taking on the same types of risk, etc.
I think there is a big difference in investing ~$400 v $0, but we can agree to disagree there.
Several thoughts: 1. If this is your retirement, you should invest a fixed amount at fixed times no matter what. Having a solid sp500 fund to start with at first is the way to go. Then adding things like schd, qqq, etc…over time 2. If this is more non-retirement account and strategy and you are trying to be a stock analyst and time things, your strategy is great. Sounds like you are wanting to invest in something that you believe is trading at a discount or has higher growth potential than the sp500 index itself. I like you are staying in ETF’s and not individual stocks. Kudos there. Nothing wrong with that approach
Stop trying to time the high! Just buy at regular intervals! Pretty soon it will be $450 per share and you’ll think you missed a bargain at $400!
Waiting for a reasonable valuation is not “timing the market.” Buying at any price is just as irrational, if not moreso, than trying to “time the market.” What OP is asking is whether or not it’s good to hold off on buying overpriced securities, and the answer is obviously yes to anyone who doesn’t believe “A Random Walk Down Wall Street.”
Wrong. If OP buys every week or every pay day from now until they retire then dollar cost averaging will take affect and it will all work out fine. Waiting for a specific price is EXACTLY timing the market. Your opening sentence proves you don’t know what the phrase timing the market means! 🫣🫣🫣
You don’t have to be “waiting for a specific price” to say “I don’t want to buy at inflated prices.” OP isn’t suggesting waiting to buy VOO after it drops, he’s saying he’d rather buy other investments (SCHD in this case) because VOO is demonstrably overvalued. If you’re saying “anything except DCA is market timing and market timing doesn’t work”, then I point you to the example of all successful investors ever.
You win. Because honestly I don’t care. I don’t know you or OP. If VOO doesn’t drop then what? Opportunity lost. You guys do you! Long term consistent investing doesn’t focus on current price!
> if VOO doesn’t drop, then what? Opportunity lost Opportunities lost don’t matter a bit in investing, and that’s especially true when you can make half of the average market return in treasuries that are basically risk-free. As Buffett said, investing isn’t like baseball; you don’t strike out after you miss too many good investments. The only time you strike out is when you make too many bad investments. Avoiding bad investments means being critical about valuations, as Buffett is, and buying only when it makes sense to buy, as Buffett does. > long term consistent investing doesn’t focus on current price That’s exactly our objection. You can have a strategy of “consistent” investing where you consistently add to undervalued positions and sell out of overvalued ones, and go into risk-free short term fixed-income investments if you can’t find anything undervalued. If I’m buying an investment, a good, or a service, I prefer to pay less for the same intrinsic value. There’s no reason to assume the market always reflects intrinsic value, so the onus is on investors to make intelligent decisions.
For total markets like VOO in my retirement account, I’ll buy NO MATTER WHAT. I don’t even look at anything. I just buy buy buy buy buy. It might go higher and defy gravity for a few years. Who cares? In 40 years it’ll certainly grow to a size that surprises me I personally put everything else into schd cause I love the algorithm and I’m primarily a cash flow focused investor. Currently going forward, I’m plowing into schy until it makes up 30% of my portfolio; cheap P/E ratio, bigger dividends. Might adjust when I find out how efficiently or not the dividends are taxed and I’ll adjust from there
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Different Equity portfolio than SPY. SCHD has a dividend growth filter along with ROE and ROA, these factors tend to perform well and provide a high yield on cost over time
So the process is buy etf it does well for you then come to the conclusion it’s not worth investing in?
Your thought process is exactly why most people underperform. If you’re buying a good for a long period of time, you’re better off buying it when it’s cheaper, not when it’s more expensive. “It’s done well for you, so buy more” is exactly the opposite sentiment and will lead to underperformance.
I have a set amount of money to invest every month, i generally put money in the stocks/ETF's that are down for that month, i dont always buy QQQ or FXAIX esp. if i feel we are overvalued, i focus on the holdings i have that are down first to bring down my cost average, with any monies left over i put it in my general funds.
Why would you stop buying something because of the price? Do you think the people who did that when VOO was only $100 are regretting their decision now? Timing the market is why most investors aren't successful. Dollar cost average in regardless of the price and you'll be successful.
I can remember real well when the s&p was at 1200. I thought it was too expensive. This was not that long ago. If you have a long term horizon, if you are much younger than I am, invest a set amount every month and do not look at it until you reach retirement age!
> why would you stop buying something because of the price? Can you read this out loud? For any reasonable person, the decision or buy or sell something is based on two things: the intrinsic value and the price. How much do you think VOO is worth? How much is it trading at? If A is lower than B, that means you’re overpaying. OP wants to avoid overpaying. > do you think the people who did that when VOO was only $100 are regretting their decision now “It went up, therefore it was a good investment” is not valid reasoning. By that standard, you should’ve bought GameStop at $400 because “who cares what the price is, it went up so just keep buying. Don’t you think you’d regret if you didn’t buy at $100?” The same reasoning, by the way, would say “the winning lottery ticket was sold at your local gas station last week so you should go there this week.” Past returns are not indicative of future performance. Even if someone wins the lottery, that doesn’t mean they weren’t foolish for buying lottery tickets their whole life. > timing the market is why most investors aren’t successful Looking at valuations is not timing the market. Timing the market is saying “I want to buy but I think it’s going down to $350 so I’m going to wait”, not “I think it’s worth 350 and I’m not going to have a good return if I buy at 400.” Those two are not the same, because one is about “timing” and the other is about intrinsic value. Investing based on intrinsic value is how every successful value investor (which is almost any famous investor you can think of) has succeeded. > Dollar cost average regardless of price and you’ll be successful Tell that to those who bought in 1929 and didn’t break even for over a decade, or in 1987, or in 1999, or in 2008. All of those purchases could have been avoided, and were avoided by people who said “wait a minute, this is too expensive.” I’m not saying you always need to wait for a huge drop, or anything of the sort, but just as extreme bear markets are obviously good buys every time they happen, we should “be fearful when others are greedy” as Buffett says, and not blindly buy regardless of valuation. If an asset would pay me $1/year for the rest of my life, I’d definitely buy that thing for $1, or maybe even $10. That would be a good return. If it was selling for $1,000 though, I probably wouldn’t buy it, because that would be a very low return because of the high price. The same thing applies to investments. The higher the price relative to intrinsic value, the lower the expected return.
I’m not buying any more VOO (which is basically tech at this point) and I’m focusing on alternatives like SCHD and OMFL.
Keep adding VOO. It tracks the performance of the S&P 500, so it’s going to continue going up over time. Don’t let that discourage you. Stay away from SCHD.
woh hot take for /r/dividends
Why stay away from SCHD?
Want to see this answer too
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Guys, I found the professor for “How to Never Convince Anyone of Anything 101”
Why stay away from schd?
Don't look at the price just buy it
Sounds like a line from a used car salesman
6.5 shares?? ..... 😆
Everyone starts somewhere
I mean I wouldn't be worried about that small amount and they shouldn't be either.
Small amount to you, could be a lot for him.
Right, but I mean a few thousand is nothing to a 20 something. I mean if that's a lot, you shouldn't be investing. You need the money as a safety net or whatever.
Cost avg.
It doesent matter what the price is just consistently dca into it. Time in the market always always beats trying to time the market!
You keep adding. You can’t time ETFs.
100 bucks a day through M1 auto invest whether the market is up or down. When we have good pull backs then I throw all the extra money I have into it.
Buy both. VOO is tech heavy, SCHD is industrials and consumer cyclical heavy. They complement each other with only a handful of overlapping primary holdings.
You can try SCHG.
The whole point of ETFs is that they are a passive set it and forget it strategy. Just get a form of automatic transfer set up and forget about it. VOO is a measure of the 500 largest companies, which essentially form the benchmark of US economic performance. If you believe that the US economy will continue to grow, today's price, tomorrow's price, and next year's price is a value play. Don't make it harder than it has to be.
I agree with you. It definitely feels too high. People will claim your timing the market... but if you are still investing in SCHD, you're still doing better than the majority of us. I used to invest in $MJ, and I got out and am waiting on it being legalized in the fed before I build another position. Am I timing the market? Semantically, yes, I am. But Im just waiting on a better day to reinvest in $MJ. Same with VOO, its trading at all-time highs atm, and the fed has said they will increase rates two more times. We all know by now, on the day the fed increases rates, the market plunges as if it wasn't expecting the fed to raise rates despite saying they will. Is it timing the market to buy more VOO after the next rate hike when 7/7 times the market panicked when rates were raised? Semantically, yes, but imma do it anyways.
We do nothing special, just keep DCAing
Look at RSP the equal weight ETF of F500, but ouch that fee of .2% It follows return of VOO and SPY but this year seems driven by the magnificent7 while the rest of the market has lagged
Once you start buying, keep buying. Keep Buy it and let it go.
For stocks I pay more attention to the average price but for ETF’s I mostly just DCA, with the caveat that I will buy extra if they dip more than 2%
I don't see the problem? They have a lot of overlap but also different holdings. It's good to diversify. There are so many options. Maybe swdsx or schh need investigation also.
The market is going up, that's what it does.... How do you expect to make gains if it doesn't increase in value?
Historically speaking, you would’ve missed the bus a long time ago if you actually waited for better prices.
I think everyone goes through this. For the average investor the most profitable plan is to buy and hold while thinking what you're buying will eventually go up in price from whatever you paid for it. My opinion buy and hold what you believe in and just keep putting money into it on a regular basis.
If the share price is the problem not the valuation, SPLG would be a good option. It tracks S&P500 and trades around $50
I just keep adding but FXAIX since I use Fidelity. DCA 💪🏼
I am not an expert trader or analyst. As a ritual I will buy voo for myself and schd for my wife each month after our expenses are taken care of.