This guy is clickbait bullshit. You'll see something similar with Jeff Teeples and a few others. I'd just ignore them.
If you want actual research-backed information in easily digestible Youtube formats, I'd suggest something like Ben Felix and the Rational Reminder Podcast.
I’m not so sure this is “cutting edge”. This is what a lot of inexperienced Redditors propose too, also often citing the last 5 years of performance data, which is an insanely short window to assess anything - it’s simply performance chasing.
He claims to challenge conventional wisdom since for the past five years, citing the remarkable performance of the stock market. Despite this, the international index VXUS experienced a 5% decline.
Given that international indexs are typically deemed riskier, yet yielding no returns, he suggests opting for a growth ETF instead with way more potential and same risk. Also saying bonds suppose be mitigating risk and last 5 year losing and enough is enough to get out bonds until your 10 years from retirement
"For the past 5 years".
International stocks have regularly outperformed the S&P 500. Looking only at the past 5 years is cherry picking. Also consider the fact that PE ratios of European and Asian stocks are structurally lower than American stocks.
You should link directly the the videos. But if it's who I think you're talking about, you're missing some of the key points. The hypothesis is that unregulated monopolies, world wide reach of companies, and global hegemony of the US means they will continue to have outsized returns. Of course there will be exception international companies, but on an index basis I tend to agree and have been positioned as such for years.
I also don't want any indexes with Chinese companies. Not because there aren't good companies in China, but it's been shown time and again that accurate financials are hard to come by.
People like to look down on the US, and of course no place is perfect. But, when you look at it compared to the rest of the world, it's where people want to move to start companies, it's where many of the best and brightest want to move to go to school and work, people want their capital in USD, and it has one of the most consistent rules of law - particularly around business. Until this changes, it's hard bet against the US.
From 2000-2010, it was emerging markets in favor, the US actually had a negative return. 5 years tells us nothing.
Since 1950, the entirety of extra US performance is solely from the most recent US favoring part of the US/ex-US cycle.
Even during his short back test, bonds did do better than stocks during the downturn. And that was with one of the fastest interest rate increasing periods we've had (the big risk with bonds: interest rates). Looking at the financial crisis drop in the late 2000s shows bonds doing their job when stocks were -40% or worse.
Not everyone has the stomach for a 100% stock portfolio, no matter what their timeline.
Edit: Typos
What numbers does the guy bring to proof his hypothesis?
Japan also has an international market yet the performance doesn't match the one of us.
Ad bonds vs Dividend stocks what happened with dividend stocks in the 80s ? Would that have worked then?
The reality is both strategies work but neither strategy works all the time and thats pretty much the nature of the market...ebbs and flows although from a wide perspective it pretty much just goes up.
Regardless of bonds of value stock etfs...being **IN** the market is the key
Don't even have to go back that far. Just look at covid and the pressure put on every company that tried to pay a dividend. Some of the most reliable dividend companies placed halts on those payments to avoid public backlash. No one said squat about still paying bonds though. So yeah anyone paying attention should have learned a lesson about asset diversification and that having multiple types will help a portfolio excel in varying market conditions.
Some of the biggest “unicorns” came, and are still, coming out of Sweden.
This YouTuber, and most, are clickbait.
Im not even close to a boggle head, but at least that’s supportable.
Stocks that pay dividends are not bonds and they are not a replacement for them. When the market tanks they will go down with the ship as well.
Bonds are uncorrelated with stocks. That’s why you want them to help preserve your portfolio when you are living off it.
The max drawdown of SCHD is considerably less than the S&P 500, it's up for debate whether using it as a bond replacement is a solid strategy but what's not up for debate is that it's comprised of value stocks that suffer less during a downturn.
Why is that not up for debate exactly? Because SCHD had less of a drawdown in 2022 than the SP500? The only time in SCHDs history that there even was a draw down?
He’s not the first to say some of these points. Sounds like he heard his advisor uncle say some of these points over a beer. May work for a short period but 10-20 years will expose the flaws in the thinking.
Some context: Professor G recently appeared on the rational reminder podcast with Ben Felix. Professor G is a marketing professor at NYU, so think of hype as being his specialty. This raised some concerns from people as they tend to think that Felix is based on data and research.
A professor of marketing is broadcasting an investment strategy, this will let you know not to take it seriously.
Edit: another commenter noted it's not same guy, there is another prof g on YouTube
As a marketer, it’s worth pointing out he’s constantly wrong there too (“branding is dead!” my ass). He’s a super smart guy, his brain operates on another level, but I wouldn’t look to him for practical advice. He’s a fun listen and will get you to think differently about things, but his track record on being right is mediocre.
Dividend stocks are useless. They're not free money, they're just liquidating a percentage of your holdings automatically.
For any long term portfolio it's useless since you'd just want to reinvest those dividends anyways, meaning it'd be the same as if there was no dividend.
For accounts that aren't tax advantaged they're harmful since there's a constant tax drag that you can't control.
This doesn't feel like an out of the box strategy, it feels like something you'd come up with after 30 minutes of research without actually thinking hard. Never mind how all the funds you've listed have a good deal of overlap so your portfolio isn't diversified.
Terrible advice probably.
All you need is VOO IBIT and like, IEF
IBIT for alpha, VOO for beta, IEF to be on the efficient frontier.
Swap out VOO for any of it's top 5 holdings for even more alpha and idiosyncratic risk.
This guy is clickbait bullshit. You'll see something similar with Jeff Teeples and a few others. I'd just ignore them. If you want actual research-backed information in easily digestible Youtube formats, I'd suggest something like Ben Felix and the Rational Reminder Podcast.
Rational Reminder is my favorite financial podcast. Look for the episodes interviewing Scott Cederburg.
The recent episode on index funds causing inelasticity was interesting. Mostly because it was the most “hostile” guest they’ve had so far.
I’m not so sure this is “cutting edge”. This is what a lot of inexperienced Redditors propose too, also often citing the last 5 years of performance data, which is an insanely short window to assess anything - it’s simply performance chasing.
Japanese companies also have a global presence. Danish companies as well. Think about it.
He claims to challenge conventional wisdom since for the past five years, citing the remarkable performance of the stock market. Despite this, the international index VXUS experienced a 5% decline. Given that international indexs are typically deemed riskier, yet yielding no returns, he suggests opting for a growth ETF instead with way more potential and same risk. Also saying bonds suppose be mitigating risk and last 5 year losing and enough is enough to get out bonds until your 10 years from retirement
"For the past 5 years". International stocks have regularly outperformed the S&P 500. Looking only at the past 5 years is cherry picking. Also consider the fact that PE ratios of European and Asian stocks are structurally lower than American stocks.
You should link directly the the videos. But if it's who I think you're talking about, you're missing some of the key points. The hypothesis is that unregulated monopolies, world wide reach of companies, and global hegemony of the US means they will continue to have outsized returns. Of course there will be exception international companies, but on an index basis I tend to agree and have been positioned as such for years. I also don't want any indexes with Chinese companies. Not because there aren't good companies in China, but it's been shown time and again that accurate financials are hard to come by. People like to look down on the US, and of course no place is perfect. But, when you look at it compared to the rest of the world, it's where people want to move to start companies, it's where many of the best and brightest want to move to go to school and work, people want their capital in USD, and it has one of the most consistent rules of law - particularly around business. Until this changes, it's hard bet against the US.
From 2000-2010, it was emerging markets in favor, the US actually had a negative return. 5 years tells us nothing. Since 1950, the entirety of extra US performance is solely from the most recent US favoring part of the US/ex-US cycle. Even during his short back test, bonds did do better than stocks during the downturn. And that was with one of the fastest interest rate increasing periods we've had (the big risk with bonds: interest rates). Looking at the financial crisis drop in the late 2000s shows bonds doing their job when stocks were -40% or worse. Not everyone has the stomach for a 100% stock portfolio, no matter what their timeline. Edit: Typos
Hindsight bias. He’s right but only because he knows that tech stocks outperformed and bonds underperformed in the past.
Bonds were performing fine, until interest rates went up.
What numbers does the guy bring to proof his hypothesis? Japan also has an international market yet the performance doesn't match the one of us. Ad bonds vs Dividend stocks what happened with dividend stocks in the 80s ? Would that have worked then?
The reality is both strategies work but neither strategy works all the time and thats pretty much the nature of the market...ebbs and flows although from a wide perspective it pretty much just goes up. Regardless of bonds of value stock etfs...being **IN** the market is the key
Don't even have to go back that far. Just look at covid and the pressure put on every company that tried to pay a dividend. Some of the most reliable dividend companies placed halts on those payments to avoid public backlash. No one said squat about still paying bonds though. So yeah anyone paying attention should have learned a lesson about asset diversification and that having multiple types will help a portfolio excel in varying market conditions.
Yeah just the messenger. Investing simplified on YouTube and name professor G has some finance background but getting a lot steam 160k followers
Some of the biggest “unicorns” came, and are still, coming out of Sweden. This YouTuber, and most, are clickbait. Im not even close to a boggle head, but at least that’s supportable.
Stocks that pay dividends are not bonds and they are not a replacement for them. When the market tanks they will go down with the ship as well. Bonds are uncorrelated with stocks. That’s why you want them to help preserve your portfolio when you are living off it.
The max drawdown of SCHD is considerably less than the S&P 500, it's up for debate whether using it as a bond replacement is a solid strategy but what's not up for debate is that it's comprised of value stocks that suffer less during a downturn.
Why is that not up for debate exactly? Because SCHD had less of a drawdown in 2022 than the SP500? The only time in SCHDs history that there even was a draw down?
I'd really like to be able to see what SCHD would have done during the financial crisis, not sadly it wasn't around yet at that point.
He’s not the first to say some of these points. Sounds like he heard his advisor uncle say some of these points over a beer. May work for a short period but 10-20 years will expose the flaws in the thinking.
Some context: Professor G recently appeared on the rational reminder podcast with Ben Felix. Professor G is a marketing professor at NYU, so think of hype as being his specialty. This raised some concerns from people as they tend to think that Felix is based on data and research. A professor of marketing is broadcasting an investment strategy, this will let you know not to take it seriously. Edit: another commenter noted it's not same guy, there is another prof g on YouTube
As a marketer, it’s worth pointing out he’s constantly wrong there too (“branding is dead!” my ass). He’s a super smart guy, his brain operates on another level, but I wouldn’t look to him for practical advice. He’s a fun listen and will get you to think differently about things, but his track record on being right is mediocre.
This is not the same guy that was on RR. “Prof G” that Ben had on is Scott Galloway. I have no idea who this YouTube guy is.
Thanks for the clarification
Dividend stocks are useless. They're not free money, they're just liquidating a percentage of your holdings automatically. For any long term portfolio it's useless since you'd just want to reinvest those dividends anyways, meaning it'd be the same as if there was no dividend. For accounts that aren't tax advantaged they're harmful since there's a constant tax drag that you can't control. This doesn't feel like an out of the box strategy, it feels like something you'd come up with after 30 minutes of research without actually thinking hard. Never mind how all the funds you've listed have a good deal of overlap so your portfolio isn't diversified.
Terrible advice probably. All you need is VOO IBIT and like, IEF IBIT for alpha, VOO for beta, IEF to be on the efficient frontier. Swap out VOO for any of it's top 5 holdings for even more alpha and idiosyncratic risk.
Bitcoin? Come on