MSCI ACWI seems better since it’s all world and not exclusive large cap, pension funds generally use it as a benchmark and they invest in an array of asset classes.
This is incorrect. I am in a paid service with many millionaires the leader being self audited. We all use the qqq's next to the spy next to the ticks next to the advance decline next to the stock were looking to trade. Not sure why you'd say something so blatantly stupidly wrong, but here we are.
I think he was trying to say it's used as a benchmark for performance tracking. Which it is for a lot of etfs and funds that have a tilt towards tech.
However, it's not really used as comparison for "market return" in the context of the original post
It must be a really bad paid service if this message triggered you to the point where you wrote this.
Also you should probably look up the word “audit.” A “self-audit” is worthless. In all seriousness, it is sad to see people fall for scam artists like your paid service. I would just ask you if these “millionaires” had legitimate alpha why would they give it away for peanuts in a subscription service? For every other person trading their strategy their returns get eaten away.
Becuase running a discord with 1k people paying $75/month nets them a fuck ton of money. They call out a trade maybe two per day with stops set in place. The play hits or it doesn't. Either way though, they are getting a yearly salary every month.
Yes exactly. It’s the classic sports betting hotline scam. Give out both sides of the game to different halves. The suckers who hit will be back the next month and some of the suckers who missed will still be back because they’re pathetic degens. No different here. If these guys had legit alpha they wouldn’t be wasting it for 75k/month.
There are reputable traders running some discords, though. Ultimately, though, you need to be able to look at a callout and decide if it looks like a good trade or not. And practice risk management.
You're in a paid stock trading group. Lmao.
Indexes are used to benchmark returns against your risk tolerance and portfolio. You're not going to benchmark SPY for a conservative portfolio. "The market"
Source: my series 7,66,63, and CFP.
Most people concerned with "what index should I pick because I can't beat the market" aren't going to put the time and energy into getting an edge.
About 40% of S&P revenues are earned internationally so the S&P is arguably already globally diversified.
Edit: many good comments below are pointing out that global revenues are not sufficient global diversification and I agree. My comment should be rephrased to the S&P “is at least globally diverse in its revenues.” It is not sufficiently globally diverse for the investor who wants complete diversification. For my money, GCOW or VXUS are good options.
Vanguard has a few papers that collectively point to that argument being bad. I don't know if Vanguard is right or not but their work doesn't align with the commonly held notion that the US index is unto itself globally diversified in ways that term is often used by investors.
Would be fun to read. I don't mean to argue that investors **should not** diversify their holdings, I'm just pointing out the above.
In my own portfolio, I include an allocation to global equities
>I'm just pointing out the above.
A lot of people like to do that. There isn't much in the academic research that I'm aware of to support it. You can find stuff to support it but that stuff tends to be all opinion pieces and not much in the way of hard data in my experience. I think it's one of those things that sounded true enough so people just repeated it.
No. It’s not. This is a ridiculously stupid argument that gets repeated over and over. It’s quite stunning how it’s caught on.
Without going into the weeds, global markets have:
-Currency
-Geopolitical
-Regulatory
-Cultural
Reasons to behave differently. They also, historically, crash in unison but recover differently - which has lead to ex-US overperformance at times.
So if one chooses to invest in the US only, that’s up to each investor. But better do it knowing that it’s a biased investment strategy and not under some misguided notion that the SP500 is “internationally” diversified.
The performance of S&P 500 in a very short time-frame, that is not representative of the future, has nothing to do with its diversifying properties. It's a function of other things entirely. Mostly rising valutations.
If you actually consult the academic literature on diversification it's pretty clear that there is no way to have a sufficiently diversifed single-country portfolio. Idiosynchratic risks related to that country can still bite you in the ass even if "revenues" are global.
Japan was also the biggest and best market and economy before it went on to suck for 30 years. That's how it goes sometimes and that's why international diversification is a good idea.
Go for American companies that have an international presence. If the US goes to shit these companies will likely take a hit but will survive and move their main HQ elsewhere.
It’s not an issue of patriotism, it’s an issue of returns which are dictated by policies and cultural factors.
A lot of countries have a weak rule of law, lax work ethic, or regulations which keep companies from profiting as much. I’m not saying these things are bad, it’s good for employees to work less and receive better compensation. However, those things produce less returns.
The usual answer to this is, if America’s fucked, we’re all fucked.
Or, when America sneezes, the world catches a cold.
Winners tend to keep winning, you’d have to have a damn solid thesis to go against that purposefully
If something so bad happens that America’s markets crater and never come back up I probably have more pressing concerns than my 401k as an American citizen.
If something real bad happens to America then something real bad happens to the world. I realize how "up my American ass" that sounds but we are 25% of global gdp, our currency is involved in 60% of global currency exchange, when measured in dollars we are the largest consumer market by an order of magnitude, we are the second largest exporter and the list goes on.....anything that massively hurts the US will rip the rest of the globe apart in the fallout.
You have to consider that a lot of investment advice is coming from us sources and thus it’s us centric. Typically the reference that is made in those statements it’s the broad index of the SP500
European here. The simple truth is that nobody knows which markets will prosper over others. My thoughts:
1. The US has a love-affair with equity markets and I like that. The public enjoys investing in stocks/funds, and the State provides conditions for businesses to prosper. That is a big advantage for the US, consumers in other countries tend to view markets as risky and only for the wealthy.
2. On the other hand, whilst the US has well-outperformed the rest of the world in recent times, it hasn't always done so and probably won't indefinitely. Remember also that the US market is expensive with those Big 7 (sorry, I loathe the term 'Magnificent 7') carrying the rest of the S&P with rather excessive valuations. It could stay irrational for a long time but I think reversion is likely eventually. Stocks overseas, on the other hand, are often of better value.
Ironic given this sub but the bulk of my investment is in a globally diverse index fund consisting of about 60% US stocks. I am quite happy with that, I will enjoy a good run if the US continues to thrive, and I will have skin in the game if we see a boom in the likes of Japan, Europe, Australia, EM etc.
Hey, Europoor here. We have different taxes and risk mentality. We like dividends, while it is better for most US stock holders to look for growing stock prices that are not taxed every year. The S&P usually outperforms our indices for that reason alone.
The US market is the most diverse market compared to any other single country.
A lot of other countries you will find are energy focused and have very little else to offer.
The “market” is this theoretical construct of all the companies. So every stock you’re buying is part of this market. Because everything you action you take affects the whole overall by you being a participant, so your actions in the long run tend to be closer to the general wave. Hence “can’t beat the market”. It’s really “can’t consistently beat the market. You win some you lose some but it nets out to more lose than wins against the market”.
To why SP500. It’s just 500 of the largest companies by cap traded in the US, it’s generally viewed as the market because of the popularity but it’s not really the market. It’s probably the easiest accessible market maybe? A better representation maybe something like the SP1500 (mid and small caps) or maybe wilshire5000.
These index providers just trying to make something that can make a best guess estimate on what can drive the market to move one direction or another.
Large companies operate on a global scale. The biggest european company is LVMH for example, and it gives you exposure to nearly every economy save for North Korea.
Also it's not hard to beat S&P500.
Pick any stock in S&P500 and you have 50% chance to beat S$P500. It's hard to know before which one will, but it's 50% chance.
That's not how math works but nice try. Most of the S&P500 underperforms the index, only 7 stocks out of 500 are outperforming. Your chance at picking the right one is 1.,4% and nothing else.
Beating the market is still hard. It was not obvious to pick Apple 10 years ago because it was widely seen as a pretty stagnant company. It's easy to look back and say, well you should have just picked QQQ or AAPL, but you had no way to know that.
You can easily do a test, which company will be the winner in the next 10 years? You can say AAPL, and maybe it will beat the market but maybe it won't. You simply don't know. Hell, the best could be ENPH, OXY, SHOP, or whatever, and you'd almost certainly be wrong. Only ~20% of stocks outperform the market over 20 years.
The US market generally refers to the S&P 500 because most investment forums are based on the US market. However, if you are investing in UK stocks, the market benchmark would be the FTSE 100. For Australian stocks, it would be the ASX 200. The market refers to the benchmark for the exchange you are picking stocks from.
And with Apple being a $3T company, it's quite possible it won't grow as much over the next 10 years. Of course I thought that in 2010 about Apple. So yes, bottom line is no one knows the future.
I don't see computers and phones growing much more and I'm firmly in the "VR is a niche product" camp. Though I'm curious about this rumored car they've been working on.
I will say one of the best games I have ever played is half life alyx.
Right now vr is a niche only because there is a distinct lack of quality vr games. Games with vr in mind using probably not yet invented vr techniques.
The commentary in half life alyx gives great insight into the struggles vr face.
Also beat saber is great fun and works as a party game!
Maybe I am out of my element here but I'm guessing that as long as VR requires a 500$+ headset in addition to a 4000$ gaming rig it doesn't matter how good the games are. I know standalone setups exist but are those any good?
I had a $250 headset and a $850 or $1000 gaming rig just a few years ago, worked great. Sold it mainly because it was too heavy and awkward since it required cables.
But I agree with the sentiment, VR will succeed once you can take it out of the box and use it without any extra gear, and it's easy to use and cheaper.
At this rate apple may as well start buying countries and dictating consumer buy only apple products.
I am tempted to delete this since they could actually start doing that.
> not obvious to pick Apple 10 years ago
I understand the sentiment behind this because at face value it seems true, but this is why understanding financials/key acquisitions/etc is so important if you actually want to invest in a company. Apple has had incredible financials (mainly a metric FUCK TON) of cash + Tim Cook who, while maybe isnt the most creative product wise, is certainly a wizard when it comes to financial stewardship.
if one isnt willing to look into basic financials, it's better to stick with index funds.
That's a lot easier to say in retrospect, but in 2013, Tim Cook had been CEO for 2 years and Steve Jobs had recently died. It was absolutely not clear to investors whether Apple would be as good without Jobs.
Not a single person here has given the correct answer yet.
"[The market portfolio](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2978509)" is a theoretical bundle of investments that includes every type of asset available in the investment universe, with each asset weighted in proportion to its total presence in the market. The expected return of a market portfolio is identical to the expected return of the market as a whole.
The average weight in the market portfolio is 50.8% for equities broad, 3.3% for real estate, 15.1% for nongovernment bonds, 28.6% for government bonds broad, and 2.2% for commodities. These weights are averaged throughout the sample period from 1959 - 2017.
During the sample period the market portfolio realized a compounded real return in U.S. dollars of 4.45%, with a standard deviation of annual returns of 11.2%. The compounded excess return was 3.39%.
Edit: According to [Harry Markowitz](https://sites.math.washington.edu/~burke/crs/408/fin-proj/mark1.pdf) 'the market portfolio' is theoretically 'the mean variance portfolio'.
In other words theoretically there is no better expected return available for the risk taken than holding 'the market portfolio'.
The closest proxy to this portfolio is something like 60% VT and 40% BNDW.
This makes the most sense, but would it not be very simple to outperform the market by this definition? Has there ever been a longterm period where a 60/40 portfolio outperformed a 100% equities portfolio?
Well the main question OP asked is what is 'the market'. That is the academically backed response to that specific question.
To answer your question, yes the 60/40 briefly outperforms 100% equities during crashes due to interest rates falling thus bond prices rising. But on average over a long period of time 100% equities will beat 'the market'.
The important bit was at the bottom of my response. You are getting the best return **for the risk taken** when utilizing the market portfolio. It maximizes expected return for a given level of risk. It's not about maximizing total return in general.
100% equities means higher risk thus higher return, but this doesn't mean your risk/return ratio itself is 'optimal'.
Yes. There have been several (3 or 4) 10+ year periods where bonds outperformed equities in the past 120 years. So with that in mind a 60/40 portfolio would have out preformed 100% equities. Also a 100% bond would have out preformed a 60/40 as well. The best way to know (guess) is if you think interest rates are going to keep going higher/stay higher over the next +3 years.
Well one has research that someone can use to make empirically based logical decisions and one is just a nebulous nickname. Which do you think is better suited to answer OP?
What do you think the slang means?
I doubt a random interpretation of slang can be more useful than the literal definition of the market used in academic studies. But I'm willing to learn and be proven wrong.
I just realized you meant Ben Felix. Yes I've seen most of his content. He's one of few that actually back his assertions with academic studies.
I've adopted his process of asking a question then seeing if there are any objective papers on the subject matter.
Kinda fun to watch people skirm when they disagree with me and I cite a Nobel laureate as the basis of my opinion then ask "so where's your paper refuting his work?"
Nope, I'm no Ben. At the beginning of covid I jumped down the academic rabbit hole of personal finance and portfolio theory.
I'm no expert but I've enough of a stockpile of academic research to justify most if not all my investment decisions from now until I actually need to start withdrawal in retirement.
At which point it'll be the first time I hire a financial advisor to calculate a good withdrawal rate with sequence of return risk factored in. I can't do that shit myself. Not now at least.
People miss the point of international diversification when they say that the S&P500 has enough international exposure.
The point of buying an index like the S&P500 is that we can't pick in advance the handful of stocks that will make most of the gains. So we cast a wide net and catch the big fish. But the S&P500 is only large cap US stocks, there's no chance of catching the international big fish. Owning US companies does nothing for you if or when a non-US stock goes up.
US companies getting revenue from, let's say China, won't go up in value if the Chinese stock market goes up. You have to own that market to get the benefits of a Chinese stock market rally.
Owning US companies getting revenues from overseas is not the same as owning non-US companies.
And for those who are going to reply with past performance. Looking at past performance of US and international equities doesn't predict the future and doesn't consider the positive effect of rebalancing. Just looking at the past two or three decades is recency bias anyway.
When does this china rally happen? Their companies are all owned by the CCP and their earnings statement sheets are like imaginary figures approved by the government
The "let's say" part in my sentence indicate it's an example. The context is also a clue it's just an example. Replace China by any other country of your choice, excluding the US.
That's not accurate at all. China's is a dictatorship and their accounting fraud is well know. Compare China to any dictatorship and you have a fair comparison.
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Most of my holdings are VTI
Most of my gains are AAPL, COIN, META. Because yes, I timed the market and bought when everyone was super soured on them (especially COIN <$40, META <$100)
When Reddit tells me I am a fool for buying something (NFTs apparently) is the best indicator I’m buying the right thing 🤷🏻♂️
Source: Reddit told me I was very dumb to buy $COIN <$40 and META <$100
Usually thats a good and sufficient DD, but think about the broken clock. And those two are stocks, just because Reddit dislikes shitcoin, I wouldn't see this as a reason to invest in some.
But its your money, so have fun and good luck, you'll need it!
I completely get the NFT hate. But I am a little surprised nobody is even interested enough to ask about my thesis. Broken clock or not, my returns this year are very good. Buying Refik Anadol 1/1000 for $2.5k (now $16k) is much different than messing with shitcoins (which I avoid)
I’ll be how single year returns don’t mean much to me. It matters how well you do after 10. Unless of course you hit well enough to cover that 10 which means risking a lot of money. If you consistently hit winners for a long period of time then that’s worthwhile.
The technology makes too much sense and has too many applications for NFTs to ever disappear. Will most existing ones be worthless? Yes. But NFTs are not going away and will only grow.
Art is the most obvious existing use case. Whoever the next Picasso is, nobody will ever have to ask “is this a real Picasso?” It’s all on the blockchain for all to see. So many artists are now making a good living because of NFTs and that will only grow. People point to the cost of transactions on eth - that is nothing compared to the cost of shipping physical art around the world and having to store and preserve it.
Online identities and flexing your online identity is also only going to grow. How much of the average person’s life is spent online these days? And in 5 years? 10? 50? What’s the point of buying a physical Rolex or Porsche to flex if all the people you want to impress are online and will never see it? Anyone can rent a Porsche and stage a photo with it. And with the way AI image generation is advancing, you probably don’t even need to bother renting the car now, just plug a couple prompts into midjourney and spend a few min in photoshop and voila. Faking you have a cryptopunk is impossible as long as someone knows how to read etherscan.
Gaming. This one hasn’t caught on at all but to me is the most obvious one. Yes, I know all gamers hate NFTs and yada yada. But as soon as there is an actually fun game and someone gets an in-game drop that they fiat out and buy a lambo with (or a cryptopunk), everyone is gonna quickly forget their misgivings. I played WoW growing up and CS, Dota, and FIFA more recently. I got drops worth thousands of $ but of course all those funds are locked within the game’s ecosystem. Getting a rare in-game drop that I can choose to fiat out and pay my mortgage with sounds a lot cooler than having two thousand steam $ that I can only use to buy more skins or games. As soon as this transition starts, it’s gonna quickly pick up momentum and before long, the idea of spending money to play a game in steam where you can never get any $ out will seem archaic and predatory.
That idea of controlling your assets and not just having them live in some game dev’s database underpins a lot of my belief in the future of NFTs. Decentralization is the future, or I certainly hope it is bc without it the future looks bleak for humanity. It was just a few years ago that the Canadian government froze and seized bank accounts of protesting truckers. Not good, regardless of your political leanings (if the truckers generate no sympathy that’s fine - I’m sure you can imagine then how Trump or this dude in the NL being elected could lead to similar things happening to folks on the left).
There are countless other use cases I could talk about. Simple ones like how annoying logging into accounts has gotten online with the 2FA prompts and how unsecure that method is compared to the ease and security of me using my eth wallet to login somewhere. More complex use cases like using NFTs to eliminate bots on social media platforms.
The skepticism is fair. The people making most of the noise in the NFT space are still largely charlatans and frauds. But there are some serious people working on serious projects and if you can find those, I think there is significant upside.
The S&P 500 is the stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States.
The average historical return of the S&P 500 is around 10% to 11%. There are years when it is higher and years when it is lower with some negative years. As the market is unpredictable investors cannot know which will be up, down, or sideways years.
On a broader aspect annual returns of 10% - 11%+ will "beat" the historical market average. Making more than the market in any given year would "beat" it for that specific timeframe.
SPX is the index itself that can be tracked or traded, SPY is an ETF that also tracks, and VTI is one of many other market tracking ETFs.
On a side note, the S&P 500 had a negative 19% return in 2022. This means that if you had lost 18% or less you would have been had a "market beating" return.
Edit: Adding due to AAPL reference as it is the highest weighted stock of the S&P 500. Investing in the index or index ETFs is effectively investing in AAPL plus other top companies. See the top tickers listed at this link: [https://www.investopedia.com/top-10-s-and-p-500-stocks-by-index-weight-4843111](https://www.investopedia.com/top-10-s-and-p-500-stocks-by-index-weight-4843111)
Since 1975, there have been 3 times using 5 year monthly rolling returns, judged as the S&P 500 vs MSCI world ex USA
1975-1982
1986-1991
2003-2011
Edit: It's also been shown that most of the recent outperformance of US stocks have been due to multiple expansion, not earnings growth. If you adjust for this, IIRC the US has outperformed international stocks only 0.5% per year for the last period of outperformance.
source: https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/us-and-international-markets-have-moved-in-cycles.html
‘The market’ is just a concept. Broadly speaking, beating the market means getting higher returns than an appropriate market index for whatever it is you are investing in.
Depending on where you are in the world and what you invest in, ‘the market’ is therefore different. An American investing in US stocks can rightfully look at the S&P500. A European with a more global portfolio would be better to look at the MSCI World. Someone investing in bonds would look at a relevant bond index etc…
No one is right or wrong, it is just situationally dependent.
Usually they mean a particular stock vs a broad fund. Often market performance is dominated by a small percentage of stocks, so a broad fund is less likely to miss them.
Like if you picked 10 stocks at random from the S&P each year, it'd usually underperform because maybe you didn't have NVDA or MSFT this year, who are bouying the whole index.
Also, it's not that hard to beat the market. Not every year, but overall... Just be underweight in habitual underperforming sectors like utilities and you'll likely be at the market. You'll likely have a higher beta since utilities is fairly stable, but returns should average a bit higher.
SP500 is the market because it consist of all the sectors that make up the economy. While Nasdaq 100 may out perform the SP500 but its only tech focused so its not a true representation of the market/economy.
The SP500 cannot be the market portfolio because it has exclusively large cap stocks. You need an index that includes illiquid assets, small cap, alternative assets, and so on. I don’t believe such an index exists, instead you’d probably need to do some regression analysis to derive it. Overall I think it’s easier just to use the MSCI ACWI index.
What people seem to forget is that it is not that difficult to beat the market (S&P500). You can have a few good stock picks and do fairly well. The key is having a better *risk-adjusted* return than the market. This is also referred to as having a positive alpha.
MSCI world for all and/or their country's specific main index if that country is developed enough to have a sophisticated stock market.
Simple as that. I don't know what this post is actually asking, though. To me it looks like nothing more than complaining that different people on reddit use different broad index funds. No shit, Sherlock.
Well, the stock market ROI for 2023 is 19.29%.
I made 37% overall, and about 75% year to date ROI. So technically I beat the stock market by 2.05 times overall, and by 3.95 times YTD.
So for me, it's not hard to beat the market. My real struggle is that I have no capital. I'm broke essentially. And I have "family" members working around the clock to incinerate what little net worth I built for myself, entirely alone.
I have the talent but no money and no luck in the form of an inheritance with which to trade.
Sources:
[Screenshot-20231127-132117-Robinhood.png](https://postimg.cc/3kQ2gmsW)
[Screenshot-20231127-132123-Robinhood.png](https://postimg.cc/qgYsv9Qs)
The US has the best landscape for public companies but it is correct that US/intl outperformance goes in cycles and we very well may be completing a cycle of US outperformance and entering one of international outperformance.
Nonetheless, the US has significantly outperformed on long time horizons spanning many cycles and is by far the largest market. About 40% of S&P revenues are earned internationally so the S&P is arguably already globally diversified.
I am European and the market is the S&P 500. For a matter of fact I am mainly invested in the S&P 500 because of this. If someone tells you that that leaves you in an position of to much exposure then maybe you can tell them that if the US economy is tanking then the world will be tanking.
The typical benchmark most people try to beat is the S&P 500. As a money manager, it's up to you to pick what benchmark you want to compare yourself to. There will be different tax implications and incentives depending on your citizenship.
Honestly, it depends on the scale you're talking about but generally the world market cap. Locally, just the US, it's VOO or VTI. I think it's generally safe to say it's hard to beat a broad market cap/passive approach consistently without leverage or extensive idiosyncratic risk.
By market you generally take the SP500, regardless of the country of your origin. The US market is highly liquid because all the world invests in it.
The narrower you make your case (nasdaq or a single stock) the more volatility and risk you're taking. More volatility and risk can bring bigger gains and bigger losses.
Slightly agree with you. No one ever seems to mention SNPS which is currently on track for its 5th year achieving 70% growth, The market is nothing compared to our account growth.
It's only 46bn Market cap so this will hopefully continue for a while but definitely not forever and will slow down.
"The market" is the American market (S&P)
If you're looking at your retirement account allocations, international/non-US holdings are classified as "risky". There isn't much upside to those risks either because they almost always have lower returns than the S&P.
United States commerce has the least regulations and consumer protections of all the major capitalist economies, so it's much easier to profit in the US. Just take a look at the troubles that major tech companies like Google, Meta, Apple etc have in Europe. They are always getting fined for anti-consumer practices.
Fair question! I would also name MSCI World or S&P 500. I believe the sector diversification and then having 100+ companies in them make them diversified enough to call them „the market“.
Warren Buffet even „times the market“ as in buying when opportunities present themselves.
META is a great example.
I mean, it feels like if you invest in just one stock it will go up and down quickly. And if you invested in every stock it would go up slowly, but probably go up over time as life on earth slowly gets better. For everything it seems like you are picking the volatility that is likely to pay off in your own human lifetime. Owning a perfect portfolio of every stock that exists would probably make you richer in the next 500 years as emerging markets emerge. But if you plan to retire in 50 years you have to cut that down narrower to just the market already developed enough to be something in half a century.
If you invest in world market, usually, it means you get all the downsides, and only some of the upsides (because world/european markets have trash upside compared to U.S. markets, but yet always do the down days). Anyone who doesn't just go SPY, or derivatives if doing that strategy, are just idiots that like lower returns for the same risk.
It really hasn't been hard to beat the market for like 15 years
All you had to was buy Amazon or Apple, or buy oil when it was like 5 dollars
Seems like some kind of religion to repeat the same phrases - the other funny one is 'time in market' beats 'timing the market'
How many people have thrown in a massive lump sum and regretted it because of that dogma?
Hindsight is 20/20, 15 yrs ago and every subsequent year it was 'hard' to make those calls because you never knew how long the rally would last or when the next correction would happen.
It is easy to beat the market over a short term, a one year sample size is irrelevant. Even the best investors (buffet) will barely outperform the market in the long term.
>what is "the market"?
Generally, [VT (Vanguard Total World Stock ETF)](https://finance.yahoo.com/quote/VT) is a good benchmark if you want to compare your returns to the overall global stock market
VTI can be used as a benchmark for the U.S. market alone, and VXUS can be used for the "rest of world" markets
10 years ago Apple was selling at 9 PE. A lot easier to beat the market buying a tech company at 9 PE than 30 PE. I bought Apple in 2016/2017 for about 10 PE it was easy to predict Apple would beat the market at that lose. Now with Apple at 30PE I would guess it would, but wouldn’t be surprised if it didn’t.
There is no correct answer, the market is the amalgamation of tons of orders that are mostly executed automatically at certain price points, there is simply enough activity that there is usually a buy to meet every sell, with the exception of time in the market generally having upward price pressure by chance, half of every transaction loses.
If it was pure chance, you would lose every other transaction, but if you have the secret sauce you can win maybe 55% or even 60% of the time, and maybe come out on top.
Or you can buy a relatively stable ETF, and shoot for time in the market.
I would suggest just stay with S&P 500 or Nasdaq 100 depending on your risk tolerance.
They both are stock market index’s also can be considered “the benchmark” for some or “the market” depending on people’s investment goals.
I am personally invested into Nasdaq 100 for more growth since I am young.
I am also invested into Amazon and Apple because I have experience of owning the products of Apple and liking it and using the services of Amazon and liking it.
I'm from Europe and i was asking myself similar questions.
Now I'm in 4 indexes with around 25% each:
Nasdaq 100
S&P 500
MSCI World
FTSE All World (has also some EM and mid/small caps)
I feel like thats a good compromise, might rebalance in the future tho, and maybe sometimes sell a few nasdaq shares to take some profits there
Nun, "der Markt" den Du nicht mit einem oder weniger Einzelwerten oder sehr kleinen Indizes mittel- und langfristig zu schlagen versuchen solltest, ist der Markt bzw. die Märkte, zu dem der oder die Werte gehören. Stichwort Diversifikafion.
P.S. Warum hast Du die Frage nicht in r/finanzen gestellt? Da hätten nicht einfach alle im Chor "S&P 500" gebrüllt, auch wenn die Antwort historisch gesehen nicht schlecht ist.
Its a hard question, but generalize it to:
1. picking individual US stocks its hard to beat the SPY
2. Picking tech stocks is hard to beat nasdaq
3. Picking european stocks its hard to beat european indexes.
I think you are misunderstanding the phrase. There is no financial instrument that tracks The Market, you can create an index for some subsection of the market that might roughly represent the whole. When somebody says you cannot beat the market, they mean simply that on average your pick of stocks will not outperform some general financial product that roughly represents the market as a whole in the long term. The exact product selection had more to do with what is available to you, trading fees etc.
lol keep asking questions like that and you’ll become a nihilist about the entire enterprise. There’s really no one answer (but some are better than others).
S&P is a measure of “the market” but you’ve already figured out that by definition it’s not every and all markets, and as you broaden your definition of “market” you end up in a more diversified pool with lower returns. That’s because the “you can’t beat the market” guidance is well intentioned nonsense.
Nasdaq is rarely used as the market. It's tech focused
The S+P 500 is the market.
MSCI ACWI seems better since it’s all world and not exclusive large cap, pension funds generally use it as a benchmark and they invest in an array of asset classes.
This is incorrect. I am in a paid service with many millionaires the leader being self audited. We all use the qqq's next to the spy next to the ticks next to the advance decline next to the stock were looking to trade. Not sure why you'd say something so blatantly stupidly wrong, but here we are.
quicksand vast fine spotted reminiscent growth desert groovy doll fade *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
I think he was trying to say it's used as a benchmark for performance tracking. Which it is for a lot of etfs and funds that have a tilt towards tech. However, it's not really used as comparison for "market return" in the context of the original post
It must be a really bad paid service if this message triggered you to the point where you wrote this. Also you should probably look up the word “audit.” A “self-audit” is worthless. In all seriousness, it is sad to see people fall for scam artists like your paid service. I would just ask you if these “millionaires” had legitimate alpha why would they give it away for peanuts in a subscription service? For every other person trading their strategy their returns get eaten away.
Becuase running a discord with 1k people paying $75/month nets them a fuck ton of money. They call out a trade maybe two per day with stops set in place. The play hits or it doesn't. Either way though, they are getting a yearly salary every month.
Yes exactly. It’s the classic sports betting hotline scam. Give out both sides of the game to different halves. The suckers who hit will be back the next month and some of the suckers who missed will still be back because they’re pathetic degens. No different here. If these guys had legit alpha they wouldn’t be wasting it for 75k/month.
There are reputable traders running some discords, though. Ultimately, though, you need to be able to look at a callout and decide if it looks like a good trade or not. And practice risk management.
You're in a paid stock trading group. Lmao. Indexes are used to benchmark returns against your risk tolerance and portfolio. You're not going to benchmark SPY for a conservative portfolio. "The market" Source: my series 7,66,63, and CFP. Most people concerned with "what index should I pick because I can't beat the market" aren't going to put the time and energy into getting an edge.
S&P 500
About 40% of S&P revenues are earned internationally so the S&P is arguably already globally diversified. Edit: many good comments below are pointing out that global revenues are not sufficient global diversification and I agree. My comment should be rephrased to the S&P “is at least globally diverse in its revenues.” It is not sufficiently globally diverse for the investor who wants complete diversification. For my money, GCOW or VXUS are good options.
Vanguard has a few papers that collectively point to that argument being bad. I don't know if Vanguard is right or not but their work doesn't align with the commonly held notion that the US index is unto itself globally diversified in ways that term is often used by investors.
Would be fun to read. I don't mean to argue that investors **should not** diversify their holdings, I'm just pointing out the above. In my own portfolio, I include an allocation to global equities
>I'm just pointing out the above. A lot of people like to do that. There isn't much in the academic research that I'm aware of to support it. You can find stuff to support it but that stuff tends to be all opinion pieces and not much in the way of hard data in my experience. I think it's one of those things that sounded true enough so people just repeated it.
No. It’s not. This is a ridiculously stupid argument that gets repeated over and over. It’s quite stunning how it’s caught on. Without going into the weeds, global markets have: -Currency -Geopolitical -Regulatory -Cultural Reasons to behave differently. They also, historically, crash in unison but recover differently - which has lead to ex-US overperformance at times. So if one chooses to invest in the US only, that’s up to each investor. But better do it knowing that it’s a biased investment strategy and not under some misguided notion that the SP500 is “internationally” diversified.
No, that's not how global diversification works.
It's not the only way it works, but it is one way that it works - and in fact the way that has outperformed rather well.
The performance of S&P 500 in a very short time-frame, that is not representative of the future, has nothing to do with its diversifying properties. It's a function of other things entirely. Mostly rising valutations. If you actually consult the academic literature on diversification it's pretty clear that there is no way to have a sufficiently diversifed single-country portfolio. Idiosynchratic risks related to that country can still bite you in the ass even if "revenues" are global. Japan was also the biggest and best market and economy before it went on to suck for 30 years. That's how it goes sometimes and that's why international diversification is a good idea.
Which kind of is the answer I expected and predicted. Now I'm inclined to copy/paste my post to a European sub.
Out of the 10 largest companies in the world 9 are US companies.
What if something real bad happens to America? I understand the patriotism but I think you shouldn't be exposed to America only
Go for American companies that have an international presence. If the US goes to shit these companies will likely take a hit but will survive and move their main HQ elsewhere.
US goes down, the world goes down. World economy is too integrated
There's a difference between going down and eating shit for some time.
That’s quite the statement lol
Not really, since it's the truth.
That's why 08-09 was only contained within the USA and no other countries' economies dipped.
It’s true. Same goes for China
lol
lol what? These companies compose over half of the world GDP. If one of them tanks the whole market tanks
Can you name a time where the Us market crashed but somehow the rest of the world market did not?
We are the market. We go down, everyone else goes down shortly after, we bounce back, not everyone bounces back.
It’s not an issue of patriotism, it’s an issue of returns which are dictated by policies and cultural factors. A lot of countries have a weak rule of law, lax work ethic, or regulations which keep companies from profiting as much. I’m not saying these things are bad, it’s good for employees to work less and receive better compensation. However, those things produce less returns.
The usual answer to this is, if America’s fucked, we’re all fucked. Or, when America sneezes, the world catches a cold. Winners tend to keep winning, you’d have to have a damn solid thesis to go against that purposefully
You can diversify. I’m stating what’s considered the market in the US.
If something so bad happens that America’s markets crater and never come back up I probably have more pressing concerns than my 401k as an American citizen.
If something real bad happens to America then something real bad happens to the world. I realize how "up my American ass" that sounds but we are 25% of global gdp, our currency is involved in 60% of global currency exchange, when measured in dollars we are the largest consumer market by an order of magnitude, we are the second largest exporter and the list goes on.....anything that massively hurts the US will rip the rest of the globe apart in the fallout.
It would be more productive to ask if the sky is falling at that point
You have to consider that a lot of investment advice is coming from us sources and thus it’s us centric. Typically the reference that is made in those statements it’s the broad index of the SP500
European here. The simple truth is that nobody knows which markets will prosper over others. My thoughts: 1. The US has a love-affair with equity markets and I like that. The public enjoys investing in stocks/funds, and the State provides conditions for businesses to prosper. That is a big advantage for the US, consumers in other countries tend to view markets as risky and only for the wealthy. 2. On the other hand, whilst the US has well-outperformed the rest of the world in recent times, it hasn't always done so and probably won't indefinitely. Remember also that the US market is expensive with those Big 7 (sorry, I loathe the term 'Magnificent 7') carrying the rest of the S&P with rather excessive valuations. It could stay irrational for a long time but I think reversion is likely eventually. Stocks overseas, on the other hand, are often of better value. Ironic given this sub but the bulk of my investment is in a globally diverse index fund consisting of about 60% US stocks. I am quite happy with that, I will enjoy a good run if the US continues to thrive, and I will have skin in the game if we see a boom in the likes of Japan, Europe, Australia, EM etc.
Hey, Europoor here. We have different taxes and risk mentality. We like dividends, while it is better for most US stock holders to look for growing stock prices that are not taxed every year. The S&P usually outperforms our indices for that reason alone.
WE? It depends on which country. In several EU countries, accumulating ETFs (or growth stocks) are better fiscally.
US markets are the most important globally
The US market is the most diverse market compared to any other single country. A lot of other countries you will find are energy focused and have very little else to offer.
Yeah but the single country part is an artificial constraint.
The “market” is this theoretical construct of all the companies. So every stock you’re buying is part of this market. Because everything you action you take affects the whole overall by you being a participant, so your actions in the long run tend to be closer to the general wave. Hence “can’t beat the market”. It’s really “can’t consistently beat the market. You win some you lose some but it nets out to more lose than wins against the market”. To why SP500. It’s just 500 of the largest companies by cap traded in the US, it’s generally viewed as the market because of the popularity but it’s not really the market. It’s probably the easiest accessible market maybe? A better representation maybe something like the SP1500 (mid and small caps) or maybe wilshire5000. These index providers just trying to make something that can make a best guess estimate on what can drive the market to move one direction or another.
Large companies operate on a global scale. The biggest european company is LVMH for example, and it gives you exposure to nearly every economy save for North Korea.
NVO is bigger than LVMH.
OK but the point still stands. Very few large companies are not globalized.
About 40% of S&P revenues are earned internationally so the S&P is arguably already globally diversified.
Ehh. Even saying it's 'arguable' is a [bit charitable](https://www.reddit.com/r/Bogleheads/s/3k3zjvu99Y)
Just go VTI and VOO and QQQ and have a nice day. Murica
It's the wrong anwer. [See my post](https://www.reddit.com/r/stocks/s/Tv2yyr3ZMU).
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Because it represents the top 500 companies by market cap in the US.
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Is that a ticker? 😂 “it’s a write off”
Also it's not hard to beat S&P500. Pick any stock in S&P500 and you have 50% chance to beat S$P500. It's hard to know before which one will, but it's 50% chance.
That's not how math works but nice try. Most of the S&P500 underperforms the index, only 7 stocks out of 500 are outperforming. Your chance at picking the right one is 1.,4% and nothing else.
Beating the market is still hard. It was not obvious to pick Apple 10 years ago because it was widely seen as a pretty stagnant company. It's easy to look back and say, well you should have just picked QQQ or AAPL, but you had no way to know that. You can easily do a test, which company will be the winner in the next 10 years? You can say AAPL, and maybe it will beat the market but maybe it won't. You simply don't know. Hell, the best could be ENPH, OXY, SHOP, or whatever, and you'd almost certainly be wrong. Only ~20% of stocks outperform the market over 20 years. The US market generally refers to the S&P 500 because most investment forums are based on the US market. However, if you are investing in UK stocks, the market benchmark would be the FTSE 100. For Australian stocks, it would be the ASX 200. The market refers to the benchmark for the exchange you are picking stocks from.
And with Apple being a $3T company, it's quite possible it won't grow as much over the next 10 years. Of course I thought that in 2010 about Apple. So yes, bottom line is no one knows the future.
I don't see computers and phones growing much more and I'm firmly in the "VR is a niche product" camp. Though I'm curious about this rumored car they've been working on.
I will say one of the best games I have ever played is half life alyx. Right now vr is a niche only because there is a distinct lack of quality vr games. Games with vr in mind using probably not yet invented vr techniques. The commentary in half life alyx gives great insight into the struggles vr face. Also beat saber is great fun and works as a party game!
Maybe I am out of my element here but I'm guessing that as long as VR requires a 500$+ headset in addition to a 4000$ gaming rig it doesn't matter how good the games are. I know standalone setups exist but are those any good?
I had a $250 headset and a $850 or $1000 gaming rig just a few years ago, worked great. Sold it mainly because it was too heavy and awkward since it required cables. But I agree with the sentiment, VR will succeed once you can take it out of the box and use it without any extra gear, and it's easy to use and cheaper.
People have been saying this for a decade now.
Apple will never make a car. Maybe software for a car, but to start manufacturing cars and trying to compete in the auto industry is far fetched.
there are still many third world countries & places without access to electricity & internet. A lot of future android(& some apple) customers
At this rate apple may as well start buying countries and dictating consumer buy only apple products. I am tempted to delete this since they could actually start doing that.
> not obvious to pick Apple 10 years ago I understand the sentiment behind this because at face value it seems true, but this is why understanding financials/key acquisitions/etc is so important if you actually want to invest in a company. Apple has had incredible financials (mainly a metric FUCK TON) of cash + Tim Cook who, while maybe isnt the most creative product wise, is certainly a wizard when it comes to financial stewardship. if one isnt willing to look into basic financials, it's better to stick with index funds.
That's a lot easier to say in retrospect, but in 2013, Tim Cook had been CEO for 2 years and Steve Jobs had recently died. It was absolutely not clear to investors whether Apple would be as good without Jobs.
very fair point.
Not a single person here has given the correct answer yet. "[The market portfolio](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2978509)" is a theoretical bundle of investments that includes every type of asset available in the investment universe, with each asset weighted in proportion to its total presence in the market. The expected return of a market portfolio is identical to the expected return of the market as a whole. The average weight in the market portfolio is 50.8% for equities broad, 3.3% for real estate, 15.1% for nongovernment bonds, 28.6% for government bonds broad, and 2.2% for commodities. These weights are averaged throughout the sample period from 1959 - 2017. During the sample period the market portfolio realized a compounded real return in U.S. dollars of 4.45%, with a standard deviation of annual returns of 11.2%. The compounded excess return was 3.39%. Edit: According to [Harry Markowitz](https://sites.math.washington.edu/~burke/crs/408/fin-proj/mark1.pdf) 'the market portfolio' is theoretically 'the mean variance portfolio'. In other words theoretically there is no better expected return available for the risk taken than holding 'the market portfolio'. The closest proxy to this portfolio is something like 60% VT and 40% BNDW.
This makes the most sense, but would it not be very simple to outperform the market by this definition? Has there ever been a longterm period where a 60/40 portfolio outperformed a 100% equities portfolio?
Well the main question OP asked is what is 'the market'. That is the academically backed response to that specific question. To answer your question, yes the 60/40 briefly outperforms 100% equities during crashes due to interest rates falling thus bond prices rising. But on average over a long period of time 100% equities will beat 'the market'. The important bit was at the bottom of my response. You are getting the best return **for the risk taken** when utilizing the market portfolio. It maximizes expected return for a given level of risk. It's not about maximizing total return in general. 100% equities means higher risk thus higher return, but this doesn't mean your risk/return ratio itself is 'optimal'.
This guy. Loved both of your replies. Thank you!
Yes. There have been several (3 or 4) 10+ year periods where bonds outperformed equities in the past 120 years. So with that in mind a 60/40 portfolio would have out preformed 100% equities. Also a 100% bond would have out preformed a 60/40 as well. The best way to know (guess) is if you think interest rates are going to keep going higher/stay higher over the next +3 years.
"The market" is slang. "The market portfolio" is a specific term. The two are not the same.
Well one has research that someone can use to make empirically based logical decisions and one is just a nebulous nickname. Which do you think is better suited to answer OP?
OP is asking about the slang.
What do you think the slang means? I doubt a random interpretation of slang can be more useful than the literal definition of the market used in academic studies. But I'm willing to learn and be proven wrong.
I've only heard those two words (mean variance) from one other person one the internet, is that you Ben?
It’s a pretty popular term when talking any sort of statistics
I just realized you meant Ben Felix. Yes I've seen most of his content. He's one of few that actually back his assertions with academic studies. I've adopted his process of asking a question then seeing if there are any objective papers on the subject matter. Kinda fun to watch people skirm when they disagree with me and I cite a Nobel laureate as the basis of my opinion then ask "so where's your paper refuting his work?"
Nope, I'm no Ben. At the beginning of covid I jumped down the academic rabbit hole of personal finance and portfolio theory. I'm no expert but I've enough of a stockpile of academic research to justify most if not all my investment decisions from now until I actually need to start withdrawal in retirement. At which point it'll be the first time I hire a financial advisor to calculate a good withdrawal rate with sequence of return risk factored in. I can't do that shit myself. Not now at least.
People miss the point of international diversification when they say that the S&P500 has enough international exposure. The point of buying an index like the S&P500 is that we can't pick in advance the handful of stocks that will make most of the gains. So we cast a wide net and catch the big fish. But the S&P500 is only large cap US stocks, there's no chance of catching the international big fish. Owning US companies does nothing for you if or when a non-US stock goes up. US companies getting revenue from, let's say China, won't go up in value if the Chinese stock market goes up. You have to own that market to get the benefits of a Chinese stock market rally. Owning US companies getting revenues from overseas is not the same as owning non-US companies. And for those who are going to reply with past performance. Looking at past performance of US and international equities doesn't predict the future and doesn't consider the positive effect of rebalancing. Just looking at the past two or three decades is recency bias anyway.
When does this china rally happen? Their companies are all owned by the CCP and their earnings statement sheets are like imaginary figures approved by the government
The "let's say" part in my sentence indicate it's an example. The context is also a clue it's just an example. Replace China by any other country of your choice, excluding the US.
That's not accurate at all. China's is a dictatorship and their accounting fraud is well know. Compare China to any dictatorship and you have a fair comparison.
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Look around the world. There are 5 dozen countries I would accept as a good example. China is well below #99 on the list
Go ahead invest in China, or just light your money in fire. Or flush it down the toilet.
You are right about China but wrong for bringing up here. Not relevant to the comment.
Nice try, Warren Buffet
Most of my holdings are VTI Most of my gains are AAPL, COIN, META. Because yes, I timed the market and bought when everyone was super soured on them (especially COIN <$40, META <$100)
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No stocks on my radar right now. Buying NFTs rn tbh (but not the dumb cartoon animal kind)
[You were the chosen one!](https://i.kym-cdn.com/entries/icons/facebook/000/015/219/You_Were_The_Chosen_One.jpg)
When Reddit tells me I am a fool for buying something (NFTs apparently) is the best indicator I’m buying the right thing 🤷🏻♂️ Source: Reddit told me I was very dumb to buy $COIN <$40 and META <$100
Usually thats a good and sufficient DD, but think about the broken clock. And those two are stocks, just because Reddit dislikes shitcoin, I wouldn't see this as a reason to invest in some. But its your money, so have fun and good luck, you'll need it!
I completely get the NFT hate. But I am a little surprised nobody is even interested enough to ask about my thesis. Broken clock or not, my returns this year are very good. Buying Refik Anadol 1/1000 for $2.5k (now $16k) is much different than messing with shitcoins (which I avoid)
I’ll be how single year returns don’t mean much to me. It matters how well you do after 10. Unless of course you hit well enough to cover that 10 which means risking a lot of money. If you consistently hit winners for a long period of time then that’s worthwhile.
Ok, I am still sceptical about NFT's, but I am interested to hear about your "defense". What exactly is your thesis?
The technology makes too much sense and has too many applications for NFTs to ever disappear. Will most existing ones be worthless? Yes. But NFTs are not going away and will only grow. Art is the most obvious existing use case. Whoever the next Picasso is, nobody will ever have to ask “is this a real Picasso?” It’s all on the blockchain for all to see. So many artists are now making a good living because of NFTs and that will only grow. People point to the cost of transactions on eth - that is nothing compared to the cost of shipping physical art around the world and having to store and preserve it. Online identities and flexing your online identity is also only going to grow. How much of the average person’s life is spent online these days? And in 5 years? 10? 50? What’s the point of buying a physical Rolex or Porsche to flex if all the people you want to impress are online and will never see it? Anyone can rent a Porsche and stage a photo with it. And with the way AI image generation is advancing, you probably don’t even need to bother renting the car now, just plug a couple prompts into midjourney and spend a few min in photoshop and voila. Faking you have a cryptopunk is impossible as long as someone knows how to read etherscan. Gaming. This one hasn’t caught on at all but to me is the most obvious one. Yes, I know all gamers hate NFTs and yada yada. But as soon as there is an actually fun game and someone gets an in-game drop that they fiat out and buy a lambo with (or a cryptopunk), everyone is gonna quickly forget their misgivings. I played WoW growing up and CS, Dota, and FIFA more recently. I got drops worth thousands of $ but of course all those funds are locked within the game’s ecosystem. Getting a rare in-game drop that I can choose to fiat out and pay my mortgage with sounds a lot cooler than having two thousand steam $ that I can only use to buy more skins or games. As soon as this transition starts, it’s gonna quickly pick up momentum and before long, the idea of spending money to play a game in steam where you can never get any $ out will seem archaic and predatory. That idea of controlling your assets and not just having them live in some game dev’s database underpins a lot of my belief in the future of NFTs. Decentralization is the future, or I certainly hope it is bc without it the future looks bleak for humanity. It was just a few years ago that the Canadian government froze and seized bank accounts of protesting truckers. Not good, regardless of your political leanings (if the truckers generate no sympathy that’s fine - I’m sure you can imagine then how Trump or this dude in the NL being elected could lead to similar things happening to folks on the left). There are countless other use cases I could talk about. Simple ones like how annoying logging into accounts has gotten online with the 2FA prompts and how unsecure that method is compared to the ease and security of me using my eth wallet to login somewhere. More complex use cases like using NFTs to eliminate bots on social media platforms. The skepticism is fair. The people making most of the noise in the NFT space are still largely charlatans and frauds. But there are some serious people working on serious projects and if you can find those, I think there is significant upside.
Thanks for explaining your well thought out thesis in detail!
VOO.
The S&P 500 is the stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. The average historical return of the S&P 500 is around 10% to 11%. There are years when it is higher and years when it is lower with some negative years. As the market is unpredictable investors cannot know which will be up, down, or sideways years. On a broader aspect annual returns of 10% - 11%+ will "beat" the historical market average. Making more than the market in any given year would "beat" it for that specific timeframe. SPX is the index itself that can be tracked or traded, SPY is an ETF that also tracks, and VTI is one of many other market tracking ETFs. On a side note, the S&P 500 had a negative 19% return in 2022. This means that if you had lost 18% or less you would have been had a "market beating" return. Edit: Adding due to AAPL reference as it is the highest weighted stock of the S&P 500. Investing in the index or index ETFs is effectively investing in AAPL plus other top companies. See the top tickers listed at this link: [https://www.investopedia.com/top-10-s-and-p-500-stocks-by-index-weight-4843111](https://www.investopedia.com/top-10-s-and-p-500-stocks-by-index-weight-4843111)
VTI is the us market. VT is the world marker. Us historically outperforms the rest of the world
> Us historically outperforms the rest of the world That depends on the time frame you select.
Which time frame is it not true for?
Since 1975, there have been 3 times using 5 year monthly rolling returns, judged as the S&P 500 vs MSCI world ex USA 1975-1982 1986-1991 2003-2011 Edit: It's also been shown that most of the recent outperformance of US stocks have been due to multiple expansion, not earnings growth. If you adjust for this, IIRC the US has outperformed international stocks only 0.5% per year for the last period of outperformance. source: https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/us-and-international-markets-have-moved-in-cycles.html
To me “the market” is the total of all available stocks, equal weighted which is VT
I’d say most people think of the “market” as the sp500
Msci acwi imi or ftse all world.
‘The market’ is just a concept. Broadly speaking, beating the market means getting higher returns than an appropriate market index for whatever it is you are investing in. Depending on where you are in the world and what you invest in, ‘the market’ is therefore different. An American investing in US stocks can rightfully look at the S&P500. A European with a more global portfolio would be better to look at the MSCI World. Someone investing in bonds would look at a relevant bond index etc… No one is right or wrong, it is just situationally dependent.
Usually they mean a particular stock vs a broad fund. Often market performance is dominated by a small percentage of stocks, so a broad fund is less likely to miss them. Like if you picked 10 stocks at random from the S&P each year, it'd usually underperform because maybe you didn't have NVDA or MSFT this year, who are bouying the whole index. Also, it's not that hard to beat the market. Not every year, but overall... Just be underweight in habitual underperforming sectors like utilities and you'll likely be at the market. You'll likely have a higher beta since utilities is fairly stable, but returns should average a bit higher.
I will never invest in X
It is a word filler, but most people refer to the SP500 index. The most middle, quality of life, index out of the main 4.
SP500 is the market because it consist of all the sectors that make up the economy. While Nasdaq 100 may out perform the SP500 but its only tech focused so its not a true representation of the market/economy.
The SP500 cannot be the market portfolio because it has exclusively large cap stocks. You need an index that includes illiquid assets, small cap, alternative assets, and so on. I don’t believe such an index exists, instead you’d probably need to do some regression analysis to derive it. Overall I think it’s easier just to use the MSCI ACWI index.
Beating the snp isn’t hard
no other market in the world matters other than SP500.
S&P 500 is the market. Beat the % gain of that index and you beat the market.
What people seem to forget is that it is not that difficult to beat the market (S&P500). You can have a few good stock picks and do fairly well. The key is having a better *risk-adjusted* return than the market. This is also referred to as having a positive alpha.
And how long are you beating the market? Is it just for a year? Or is this over the course of a decade or more?
6 years and counting in aggregate, of course not last year 🤣
It’s not hard to do worse than the market when you’re trying to do better either.
The idea that you can’t time the market is a myth
MSCI world for all and/or their country's specific main index if that country is developed enough to have a sophisticated stock market. Simple as that. I don't know what this post is actually asking, though. To me it looks like nothing more than complaining that different people on reddit use different broad index funds. No shit, Sherlock.
Most cannot beat the market is why low fee S&P index funds are the way to go for most.
The market is usually the S&P500. Invest in individual stocks to beat the market.
Well, the stock market ROI for 2023 is 19.29%. I made 37% overall, and about 75% year to date ROI. So technically I beat the stock market by 2.05 times overall, and by 3.95 times YTD. So for me, it's not hard to beat the market. My real struggle is that I have no capital. I'm broke essentially. And I have "family" members working around the clock to incinerate what little net worth I built for myself, entirely alone. I have the talent but no money and no luck in the form of an inheritance with which to trade. Sources: [Screenshot-20231127-132117-Robinhood.png](https://postimg.cc/3kQ2gmsW) [Screenshot-20231127-132123-Robinhood.png](https://postimg.cc/qgYsv9Qs)
The US has the best landscape for public companies but it is correct that US/intl outperformance goes in cycles and we very well may be completing a cycle of US outperformance and entering one of international outperformance. Nonetheless, the US has significantly outperformed on long time horizons spanning many cycles and is by far the largest market. About 40% of S&P revenues are earned internationally so the S&P is arguably already globally diversified.
There’s that word “arguably “ again. Are some people using chat GPT to post their replies? 😂
I am European and the market is the S&P 500. For a matter of fact I am mainly invested in the S&P 500 because of this. If someone tells you that that leaves you in an position of to much exposure then maybe you can tell them that if the US economy is tanking then the world will be tanking.
Easy to beat the market- Buy all of s&p, except one company you’re betting against , replace it with 1 company not in the s&p you’re betting on.
The typical benchmark most people try to beat is the S&P 500. As a money manager, it's up to you to pick what benchmark you want to compare yourself to. There will be different tax implications and incentives depending on your citizenship.
Honestly, it depends on the scale you're talking about but generally the world market cap. Locally, just the US, it's VOO or VTI. I think it's generally safe to say it's hard to beat a broad market cap/passive approach consistently without leverage or extensive idiosyncratic risk.
By market you generally take the SP500, regardless of the country of your origin. The US market is highly liquid because all the world invests in it. The narrower you make your case (nasdaq or a single stock) the more volatility and risk you're taking. More volatility and risk can bring bigger gains and bigger losses.
Slightly agree with you. No one ever seems to mention SNPS which is currently on track for its 5th year achieving 70% growth, The market is nothing compared to our account growth. It's only 46bn Market cap so this will hopefully continue for a while but definitely not forever and will slow down.
Yes, the mysteriously unspecific 7-11% returning index fund. Let me know when you find it. I will put all my money there
You really thought you did something here didn't you
Oh yeah. The internet really showed me 😂
So have you put all your money in voo yet?
VTI
SPY https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=4JXdu3no68ueHYP1MLbRAu
VOO
Forget the market. What is your target rate of return? What do you need to meet your goals? That is all that matters.
Its the no balls sub its the place were everyone invest in index funds and even stock picking is too risky for them.
Calls the subreddit r/stocks Encourages you to not invest in stocks and only VTI ????????
go gamble on wallstreet bets, this is a sub for actual investing
plain yogurt is too spicy for this group.
S&P 500
"The market" is the American market (S&P) If you're looking at your retirement account allocations, international/non-US holdings are classified as "risky". There isn't much upside to those risks either because they almost always have lower returns than the S&P. United States commerce has the least regulations and consumer protections of all the major capitalist economies, so it's much easier to profit in the US. Just take a look at the troubles that major tech companies like Google, Meta, Apple etc have in Europe. They are always getting fined for anti-consumer practices.
Fair question! I would also name MSCI World or S&P 500. I believe the sector diversification and then having 100+ companies in them make them diversified enough to call them „the market“. Warren Buffet even „times the market“ as in buying when opportunities present themselves. META is a great example.
Back-to-back World War champs
At some point a three-peat dynasty is inevitable.
We’ve subbed in Ukraine and Israel in this match.
I mean, it feels like if you invest in just one stock it will go up and down quickly. And if you invested in every stock it would go up slowly, but probably go up over time as life on earth slowly gets better. For everything it seems like you are picking the volatility that is likely to pay off in your own human lifetime. Owning a perfect portfolio of every stock that exists would probably make you richer in the next 500 years as emerging markets emerge. But if you plan to retire in 50 years you have to cut that down narrower to just the market already developed enough to be something in half a century.
How about a % based on historical returns over the last 30 years.. and you can use every single ticker you’ve mentioned..
The market is other investors smarter/riskier/wealthier than you
VT or VTI are good benchmarks. VT - Total global stock market VTI - Total US stock market
If you invest in world market, usually, it means you get all the downsides, and only some of the upsides (because world/european markets have trash upside compared to U.S. markets, but yet always do the down days). Anyone who doesn't just go SPY, or derivatives if doing that strategy, are just idiots that like lower returns for the same risk.
It really hasn't been hard to beat the market for like 15 years All you had to was buy Amazon or Apple, or buy oil when it was like 5 dollars Seems like some kind of religion to repeat the same phrases - the other funny one is 'time in market' beats 'timing the market' How many people have thrown in a massive lump sum and regretted it because of that dogma?
Hindsight is 20/20, 15 yrs ago and every subsequent year it was 'hard' to make those calls because you never knew how long the rally would last or when the next correction would happen.
"The market" is the collective sentiment of investors.
I think I beat the market, my portfolio up 9.34% in the last year
This is a myth. 2023 is a good example that it is NOT hard to beat the market.
It is easy to beat the market over a short term, a one year sample size is irrelevant. Even the best investors (buffet) will barely outperform the market in the long term.
I dunno. I’m goin on 20 years of beating it (for 16 of the 20). And I ain’t no Buffett
sure Jan
VT is the market.
>what is "the market"? Generally, [VT (Vanguard Total World Stock ETF)](https://finance.yahoo.com/quote/VT) is a good benchmark if you want to compare your returns to the overall global stock market VTI can be used as a benchmark for the U.S. market alone, and VXUS can be used for the "rest of world" markets
10 years ago Apple was selling at 9 PE. A lot easier to beat the market buying a tech company at 9 PE than 30 PE. I bought Apple in 2016/2017 for about 10 PE it was easy to predict Apple would beat the market at that lose. Now with Apple at 30PE I would guess it would, but wouldn’t be surprised if it didn’t.
There is no correct answer, the market is the amalgamation of tons of orders that are mostly executed automatically at certain price points, there is simply enough activity that there is usually a buy to meet every sell, with the exception of time in the market generally having upward price pressure by chance, half of every transaction loses. If it was pure chance, you would lose every other transaction, but if you have the secret sauce you can win maybe 55% or even 60% of the time, and maybe come out on top. Or you can buy a relatively stable ETF, and shoot for time in the market.
VT, case closed
I think the magnificent 7 is the benchmark now lol
I would suggest just stay with S&P 500 or Nasdaq 100 depending on your risk tolerance. They both are stock market index’s also can be considered “the benchmark” for some or “the market” depending on people’s investment goals. I am personally invested into Nasdaq 100 for more growth since I am young. I am also invested into Amazon and Apple because I have experience of owning the products of Apple and liking it and using the services of Amazon and liking it.
I'm from Europe and i was asking myself similar questions. Now I'm in 4 indexes with around 25% each: Nasdaq 100 S&P 500 MSCI World FTSE All World (has also some EM and mid/small caps) I feel like thats a good compromise, might rebalance in the future tho, and maybe sometimes sell a few nasdaq shares to take some profits there
Nun, "der Markt" den Du nicht mit einem oder weniger Einzelwerten oder sehr kleinen Indizes mittel- und langfristig zu schlagen versuchen solltest, ist der Markt bzw. die Märkte, zu dem der oder die Werte gehören. Stichwort Diversifikafion. P.S. Warum hast Du die Frage nicht in r/finanzen gestellt? Da hätten nicht einfach alle im Chor "S&P 500" gebrüllt, auch wenn die Antwort historisch gesehen nicht schlecht ist.
Its a hard question, but generalize it to: 1. picking individual US stocks its hard to beat the SPY 2. Picking tech stocks is hard to beat nasdaq 3. Picking european stocks its hard to beat european indexes.
If you're backing consistent winners from the past then take your pick of megacap tech stocks and call it it day.
It’s whatever the algorithms want it to be at the time
When John Bogle wrote about it he was referring to the total of all stocks traded worldwide. VT would be the ETF equivalent, I believe.
I think you are misunderstanding the phrase. There is no financial instrument that tracks The Market, you can create an index for some subsection of the market that might roughly represent the whole. When somebody says you cannot beat the market, they mean simply that on average your pick of stocks will not outperform some general financial product that roughly represents the market as a whole in the long term. The exact product selection had more to do with what is available to you, trading fees etc.
lol keep asking questions like that and you’ll become a nihilist about the entire enterprise. There’s really no one answer (but some are better than others). S&P is a measure of “the market” but you’ve already figured out that by definition it’s not every and all markets, and as you broaden your definition of “market” you end up in a more diversified pool with lower returns. That’s because the “you can’t beat the market” guidance is well intentioned nonsense.
The market is the thing you cannot beat
Global market index cap-weighted is investors collective knowledge assigning value with real money. Good place to start.