Ted Weschler Turned $70k into $264M in a Retirement Account
blog.umd.edu
blog.umd.edu
Step 2: Be an investment banker and have access to lots of capital that lets you make repeated risky bets.
Step 3: Benefit from bailouts when many of those risky bets fail.
So, his story is not in any way replicable by normal people and isn't even replicable by most of his peers or new entrants into his own industry today.
Investing in shares truly carries a lot of risk if the stocks are not researched properly. In this age it is even harder since there is now a lot more dangerously inaccurate information to sift through. Thus TA recommends index funds. The S&P 500 compounds a lot over 30 years.
Don't invest money you can't afford to lose.
1) Asset allocation: Basically, how much you want in stocks, how much in bonds. Those are the two major asset classes. Go way heavier on stocks early in life and maybe trend toward 50-50 later in life when you have less time to ride out dips.
2) Diversification: What specific entities you invest in. Suggestion: Total US stock market index, total world non-US stock market index, total US bond market index. This way you don't have to pick winners. You just buy everything. Let the bad stuff drop off along the way, and let the good stuff do its thing.
3) Rebalancing: Like once a year, or every time your chosen asset allocation gets at least 5% off. Whatever feels good, but keep your asset allocation under your own conscious control.
As a note, Ric Edelman, when he had a radio show, went over the IRA to Roth conversion. Several times. According to him, it's a wash. Pay tax before you invest or when you withdraw, but either way the net effect is almost identical.
I like silexia's comment. There is a lot of information not included in the story, and, if you think about it, this whole story is one data point. One guy did some things/had some things happen at a particular time in history. Don't expect to cut and paste into your own life and get rich by next week.
Important points:
1) Start as early as you can.
2) Be religious about regular investing without fail.
3) Never break into the piggy bank to buy a house or a fancy car, or for any other reason short of a dire medical emergency.
4) Take advantage of every break you can find, and any employer matches.
5) Wait.
There is a huge amount of information at Bogleheads Investing Advice and Info ( https://www.bogleheads.org/ )
It depends on where the tax rates are when you deposit and when you withdrawal. Some of that is politics, and some of that is where you fit in the tax brackets.
There's some amount of unknown and unknowable there, but if you're early in your career and not making a lot of money, Roth contributions might make a lot of sense --- might as well pay taxes upfront while they're low. Once you start making more money, traditional contributions start making more sense, as you're likely to have lower income as a retiree than while employed.
If you have some years later in life where you aren't earning much (by choice or not), roth conversions can make sense then, although that gets real complex if the reported income will interfere with benefit programs you would otherwise qualify for.
There is a lot that you can do in the market where the odds are technically in your favor AND you can adjust the number with your own behavior to manage risk, further bettering your odds.
All of this is well known and provable. Spreading FUD about the market is a great way to keep people poor, indignant and suffering a lack of freedom.
Anyone knows how to see and buy publicly traded bonds?
Lots of people lose big, personally my biggest loss was $WISH wow I got hammered there. Had it been an index fund that incorporated WISH I would have been more protected… then again my direct purchase of NVDA more than paid that back
Obviously 70k into 264M is insane and either is like one in a billion luck or the result of insider information
I think that people forget that these homely-sounding guys like Buffett and Weschler have serious, serious time and mental investments in thinking about money. Theyre not serious like you or I, maybe, who watch a few hours of Bloomberg each week. They eat, sleep, and dream about investing. Theyre basically money monks. Theyre also (and I think they would admit it too) lucky. You can make some of your own luck in investing, by studying businesses like these guys do, but you still need to be lucky. I observe that many of their investments eschew fashionable sectors like tech. I wonder if that is, again, making their own luck. I think Buffett would have choice words to say about investing in Nvidia for example.
Let's try differently. What evidence would you require to conclude "EMH is false"?
Edit: I have to make this edit because someone will point it out. YES I realize I didn't actually answer your question but the thing is this has been discussed ao thoroughly that I don't think i have anything new to add.
EMH disproven guys.
So, I misunderstood what you meant, but what you meant is even dumber than I thought. What you're saying is a source of free money. That has nothing to do with EMH whatsoever.
[1] how to define what publicly means exactly is also a question on itself which is important but not theain point here.
You literally said this, which means _infinite_ capacity. But now you're omitting that.
So what I'm reading is that your position is "EMH can only be falsified if someone finds infinite free money". Alright, this is what I call the church of the Efficient Market.
I don't know if you're trolling or just ignorant. I'm leaning towards trolling. Either way I've lost interest the conversation.
I also don’t get what I’m omitting. If you have an arbitrage opportunity, EMH means that this opportunity will disappear over time because the information that the opportunity exists spreads around and the opportunity is used up. That’s why EMH would mean that you can’t make infinite free money by arbitrating the differences. That’s what I meant and I still stand by it.
> So what I'm reading is that your position is "EMH can only be falsified if someone finds infinite free money"
Basically yes, and I’m not expecting EMH to be disproven because it’s pretty obvious.
What else would contradict the pretty basic claims of EMH?
The EMH says that you can't predict a stocks price in the future give the past data.
HFT just reacts to price changes, it doesn't really predict what it will do in the future so it really has no relevance to the EMH as they are only reacting to what prices did in the past, albiet the very recent past:)
People who believe it to be false, also believe that "if I analyse all information about some stocks I might find some which are priced less than their intrinsic value, wait for everyone else to come to the same conclusion, and once the price has appreciated to intrinsic value, I can sell it"
People who believe it to be true believe that the above is futile, because whatever price you see is already the intrinsic value so every time you try and buy at discount youre actually unknowingly buying at intrinsic value, and so you make no profit on each buy.
I pay a metric shit ton of taxes to fund the exotic lifestyles of federally elected officials and to fund wars overseas. And before you go “oh who is paying for the fire department” that is less than .02% of my taxes, a reasonable amount.
I applaud people that found a way around the utter bullshit. I’m working for free, under threat of arrest, for 3-4 months every year. Unbelievable.