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Comment by throwaway2037 | Hacker News Reader

throwaway2037

But why stress about beating the market? Just be the market with an ETF that tracks the S&P 500 index. Literally, setup auto invest from your paycheck. Go to sleep (Rip van Winkel style). Wake up 40 years later and retire comfortably.

Look at total returns over the last 40 years on the most popular indices in the world. S&P 500 crushes them all. I see a lot of "Internet advice" recommending various MSCI world indices. They are all much worse than the S&P 500.

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Picking the S&P500 over a world index because you think it will outperform, has the same problem as picking individual stocks over an index. You can't actually know which will outperform in the future.

Or, where in the world do you need to spend your money?

I live in the UK: if I buy the S&P500 over the FTSE100 (or even more so the 250, the next 250 largest companies which are typically more UK-market-oriented) I'm making a US-weighted bet. But maybe I think I'll move there, and should have that exposure. Or maybe I spend a lot of money all over the world and want a more global exposure overall.

I think at least vast majority index is right for basically everybody, but you do still need to think about which index/indices are most applicable to your situation/intentions.

Over 40% of revenues from S&P 500 companies come from overseas. That is world enough for me.

You don't need to be the best, just do well.

Has the World Index ever outperformed the SP500 over a 40-50 year span?

World indexes are normally somewhat less volatile (they’re typically _much bigger_; MSCI World is 1400 companies, and MSCI ACWI nearly 3000), which may be a useful attribute, depending on what you’re going for.

(Conversely, there are smaller indexes which tend to beat the S&P500, like the NASDAQ100, but there’s a volatility cost.)

Sometimes I wonder whether ETFs that track top valuation will lead to some weird stickyness and overvaluation in say, S&P500.

I have the same thoughts. Eventually there will be a lot of money to be made breaking the s&p 500.

Can you explain the "breaking" trade? And why haven't we seen more written about it?

Think of when George Soros broke The Bank of England for an example of the type of trade.

There is a lot of demand for S&P 500 index , but that demand isn’t exactly tied to the fundamentals of the index, and the price isn’t tied to value of the underlying companies, it’s tied to demand of people looking to save money for retirement or a place to store a nest egg. This is an opportunity for price discovery to get things wrong and eventually the market should correct that.

https://www.investopedia.com/ask/answers/08/george-soros-ban...

I don’t get it. Soros was able to break the pound because the UK government was committed to maintaining an artificial price. That’s nothing like an ETF or mutual fund of the S&P 500, which probably has one of the most efficient (relative to the capital involved) market price discovery mechanisms in history.

Not sure what they mean specifically but you've probably seen a lot written about it, in terms of BRICS, the petrodollar, ARM in China, subsidies on electric cars, and so on.

Personally I try to avoid investing in the US for political reasons, besides the wishful expectation that the empire could fall within my lifetime and hence be a not so good investment.

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