A portfolio that mirrored SP500 performance in 2023 would be too volatile to have beaten the DOW in 36 of the past 32 years. Unless you have some hidden meaning for “beat the DOW” that you’re keeping to yourself. Perhaps you mean cumulative performance since you started investing. That I could believe. Having beat it in each of those individual years is not believable under any circumstance.
This bears repeating, bolded part above ^^^^. That is my major contention with his claim, as well. Investors have good years they have bad years. But to beat an indices most every year is almost impossible. Some years you lose (to the index), but the best investors look to come out ahead in the long run. But to beat it the index something akin to 95% of the individual years is not practical.
Nope. The two of you are just wrong. I have LONG said that I got lucky with some moves, especially early on in my investing. I've had many years where I just beat the Down by a fraction of a percentage point. So nope, not impossible. As my portfolio is more diversified than ever today, it is unlikely that I will have the same track record against the Dow as I have had until now...something I have also said in the past.
My spreadsheet doesn't lie. I also don't think you naysayers understand how small of a difference it would take to LOSE to the Dow every year vs. winning against the Dow every year. It's just a line that you are either north or south of, and that amount can be infinitesimally small. You aren't understanding the odds correctly at all. Takes a little bit of luck, but it's an arbitrary measure against an arbitrarily picked Index.
OK, Flagpole has doubled down on his claim, yet again, of having beaten the DOW in 33 of the past 36 years (updated to include 2023), on an individual year basis. I’ll demonstrate why that is complete malarkey, first by simple analogy, then using a bit of math.
Let’s pretend FP is in a two round, 36 hole golf tournament. This imaginary pretend FP, unlike the real pretend FP, is a very good golfer, 0-handicap. Let’s equate matching the DOW with hitting par on a hole. As a scratch golfer, FP has a near 50-50 chance of hitting par on any given hole.
Now let’s try to imagine a couple of scenarios. First, FP ends the tournament under par. Is this possible? Of course it is. How likely? Something less than 50%, but probably not too close to zero. Lots of pro golfers would break par over two days of golf, but nobody would do it all the time, and most would do it rarely.
Still, breaking par over 36 holes, or beating the DOW, cumulatively, over 36 years, is obviously credible, but only for a very few very good golfers / investors.
however, can we imagine a golfer hitting 32 birdies or eagles over 36 holes? I think we can all agree that has never happened and likely never will, or it it would, it would be by the best and luckiest golfer to ever walk the earth.
This latter scenario is what FO is claiming, even when we gave him the easy way out to admit to claiming only the first, still very difficult feat.
What is the probability that an investor will beat the DOW in a given year? Hard to know, but we can look at Buffet’s Berkshire Hathaway as an example of what the objectively very best investor might achieve. That fund has beat the DOW somewhere less than 80% of calendar years, when I last checked. That suggests something like 80% chance, in a given year, for an acknowledged GREAT investor to beat the DOW.
The chance of him beating the DOW 32 years in a row would be 0.8^32, suggesting a probability of 1 in 1262. In other words, if you had 1262 imaginary Warren Buffets, one of them could beat the DOW32 years in a row. Now 32 years in 35 isn’t quite as demanding a test, but is of a similar order of magnitude.
So FP is claiming to be much better than the average imaginary Warren Buffet.
What is the probability that an investor will beat the DOW in a given year? Hard to know, but we can look at Buffet’s Berkshire Hathaway as an example of what the objectively very best investor might achieve. That fund has beat the DOW somewhere less than 80% of calendar years, when I last checked. That suggests something like 80% chance, in a given year, for an acknowledged GREAT investor to beat the DOW.
The chance of him beating the DOW 32 years in a row would be 0.8^32, suggesting a probability of 1 in 1262. In other words, if you had 1262 imaginary Warren Buffets, one of them could beat the DOW32 years in a row. Now 32 years in 35 isn’t quite as demanding a test, but is of a similar order of magnitude.
So FP is claiming to be much better than the average imaginary Warren Buffet.
Sheer nonsense from a liar.
The odds of Flagpole beating the Dow 32 out of 33 or 34 years are much greater than that. Over the last 30 or 40 years the Dow and the S & P are very close. I have seen where the Dow has slightly outperformed the S & P over the last 30 and 40 years. The reason for that ... the S & P has more sectors so it does well when the market is expanding and does poorly when the market contracts. Basically, it is almost 50/50 for the S & P to beat the Dow. So to beat the Dow 32 out of 33 years is 1/2 *1/2*1/2 times 29 more halves. It is about 1 in 6 billion. Flagpole took journalism in school (like John BoY) and doesn't understand probabilities at all so we need to be patient with him. No need to scold him - just comfort him and chuckle at his lack of knowledge. He has been trained to write news stories but not much else.
You are so stupid that methinks you are very likely the same poster as Sally. I could be wrong about that, but that would make sense. It's pretty rare to find two of you such big dummies in the same place outside of a Trump rally.
Sally and I could not possibly be further apart on a political spectrum. That said, I’m happy to be considered stupid in the bizarro flagpole universe. Badge of honor
What is the probability that an investor will beat the DOW in a given year? Hard to know, but we can look at Buffet’s Berkshire Hathaway as an example of what the objectively very best investor might achieve. That fund has beat the DOW somewhere less than 80% of calendar years, when I last checked. That suggests something like 80% chance, in a given year, for an acknowledged GREAT investor to beat the DOW.
The chance of him beating the DOW 32 years in a row would be 0.8^32, suggesting a probability of 1 in 1262. In other words, if you had 1262 imaginary Warren Buffets, one of them could beat the DOW32 years in a row. Now 32 years in 35 isn’t quite as demanding a test, but is of a similar order of magnitude.
So FP is claiming to be much better than the average imaginary Warren Buffet.
Sheer nonsense from a liar.
The odds of Flagpole beating the Dow 32 out of 33 or 34 years are much greater than that. Over the last 30 or 40 years the Dow and the S & P are very close. I have seen where the Dow has slightly outperformed the S & P over the last 30 and 40 years. The reason for that ... the S & P has more sectors so it does well when the market is expanding and does poorly when the market contracts. Basically, it is almost 50/50 for the S & P to beat the Dow. So to beat the Dow 32 out of 33 years is 1/2 *1/2*1/2 times 29 more halves. It is about 1 in 6 billion. Flagpole took journalism in school (like John BoY) and doesn't understand probabilities at all so we need to be patient with him. No need to scold him - just comfort him and chuckle at his lack of knowledge. He has been trained to write news stories but not much else.
You are the one who doesn't understand probabilities. This is not flipping a coin. You're wrong, dude.
Historically, the large-cap U.S. equity benchmark has seen its performance in the first five trading days and over the full year correlate in the same direction 69% of the time, based on Dow Jones Market Data going back to 1950. In election years, that correlation took place 83% of the time. The trend has also held true in eight of the last 12 years, and in 14 of the last 16 presidential election years.
Historically, the large-cap U.S. equity benchmark has seen its performance in the first five trading days and over the full year correlate in the same direction 69% of the time, based on Dow Jones Market Data going back to 1950. In election years, that correlation took place 83% of the time. The trend has also held true in eight of the last 12 years, and in 14 of the last 16 presidential election years.
Interesting. Could be the case this year even without all the trend items. Contrary to the belief of some here, I tend to be mostly pessimistic about the market generally which is WHY I have invested so much in it. I am not a permabull as I have been called. I am a permarealist. I have figured that if the market didn't do as well as I would have liked or not as well as it had historically, I would at least want a ton of money in there that I put in there, and a ton of money that I put in there does better with a low level of increase than a small amount does. Fortunately for me, the market has done what I consider to be very well since 1989, and I personally have done a little bit better annually than the market in general. I didn't need it to. I have picked my funds ONLY based on trying to increase diversity, not on performance prediction.
Flagpole, If I can cut to the chase, I think the unknowing error you are making is the same one that the majority of people would make, and most investors, for that matter. It is simply this: they don't fully understand what is in their mutual funds, and most growth oriented mutual funds are tech heavy. And in fact, even the S&P 500 is tech. heavy.
A couple of days ago I randomly picked one of the funds mentioned in regard to this discussion, looked it up, and it was something like 38% tech., and even more if you include communication sector. That is just an example. They all tend to be that way. And again, the SNP 500 index itself is tech. heavy.
I don't think you are alone in this presumption.
Excuse me if I am misrepresenting your understanding of your holdings in their entirety.
You questioning my returns really is rich as you have stated you have done better than I have (after me telling you have I have averaged right on 11% annual return since 1989). My returns are slightly better than average, and yet you have done BETTER than me but don't believe my returns? Meh.
Um...huh? I'm not even going to read that. The Dow did NOT lose 9% from 1999 to 2022. The S&P 500 did NOT lose 28% from 1999 to 2022. WTF are you talking about?
Dow close end of 1999: 11,497.12
Dow close end of 2022: 33,152.55
Well, I accidentally DID read that nonsense because it popped up with I looked for the 1999 and 2022 year end closings. Here's something it said in there regarding Dow vs S&P 500: "Over those 23 years, the S&P beat the Dow in 16 years"
Try again.
Got any comment on this nonsense you posted, Sally? You've said you have been a long term investor, and I've believed you, but how could that possibly be true and then you believe that the Dow lost 9% during that long time frame and the S&P 500 lost 28%? Care to just lick your wounds and admit you cited a fake stat there? I mean, WHAT? Dude, pull your head out of your ass.
This bears repeating, bolded part above ^^^^. That is my major contention with his claim, as well. Investors have good years they have bad years. But to beat an indices most every year is almost impossible. Some years you lose (to the index), but the best investors look to come out ahead in the long run. But to beat it the index something akin to 95% of the individual years is not practical.
Nope. The two of you are just wrong. I have LONG said that I got lucky with some moves, especially early on in my investing. I've had many years where I just beat the Down by a fraction of a percentage point. So nope, not impossible. As my portfolio is more diversified than ever today, it is unlikely that I will have the same track record against the Dow as I have had until now...something I have also said in the past.
My spreadsheet doesn't lie. I also don't think you naysayers understand how small of a difference it would take to LOSE to the Dow every year vs. winning against the Dow every year. It's just a line that you are either north or south of, and that amount can be infinitesimally small. You aren't understanding the odds correctly at all. Takes a little bit of luck, but it's an arbitrary measure against an arbitrarily picked Index.
This just destroys your fantasy:
"I've had many years where I just beat the Down by a fraction of a percentage point."
"...many years I just beat the Dow by a fraction of a percentage point."
I checked the curricula for a journalism degree at Toledo. They have a mandated class of diversity and another of non-US diversity but no where did I see a class in statistics or probability.
Do you have any idea the likelihood of "beating the Dow by a fraction of a percentage point" over many years? Like Zero? 1/10 trillion? I could see beating it by a fraction of a percentage point once or twice but to beat it continually by a fraction of a percentage point over many years is just not going to fly. Nope.
Um...huh? I'm not even going to read that. The Dow did NOT lose 9% from 1999 to 2022. The S&P 500 did NOT lose 28% from 1999 to 2022. WTF are you talking about?
Dow close end of 1999: 11,497.12
Dow close end of 2022: 33,152.55
Well, I accidentally DID read that nonsense because it popped up with I looked for the 1999 and 2022 year end closings. Here's something it said in there regarding Dow vs S&P 500: "Over those 23 years, the S&P beat the Dow in 16 years"
Try again.
Got any comment on this nonsense you posted, Sally? You've said you have been a long term investor, and I've believed you, but how could that possibly be true and then you believe that the Dow lost 9% during that long time frame and the S&P 500 lost 28%? Care to just lick your wounds and admit you cited a fake stat there? I mean, WHAT? Dude, pull your head out of your ass.
The S & P DID fall 48% in six months. I just copied that from the article and didn't notice the time line.
Nope. The two of you are just wrong. I have LONG said that I got lucky with some moves, especially early on in my investing. I've had many years where I just beat the Down by a fraction of a percentage point. So nope, not impossible. As my portfolio is more diversified than ever today, it is unlikely that I will have the same track record against the Dow as I have had until now...something I have also said in the past.
My spreadsheet doesn't lie. I also don't think you naysayers understand how small of a difference it would take to LOSE to the Dow every year vs. winning against the Dow every year. It's just a line that you are either north or south of, and that amount can be infinitesimally small. You aren't understanding the odds correctly at all. Takes a little bit of luck, but it's an arbitrary measure against an arbitrarily picked Index.
This just destroys your fantasy:
"I've had many years where I just beat the Down by a fraction of a percentage point."
"...many years I just beat the Dow by a fraction of a percentage point."
I checked the curricula for a journalism degree at Toledo. They have a mandated class of diversity and another of non-US diversity but no where did I see a class in statistics or probability.
Do you have any idea the likelihood of "beating the Dow by a fraction of a percentage point" over many years? Like Zero? 1/10 trillion? I could see beating it by a fraction of a percentage point once or twice but to beat it continually by a fraction of a percentage point over many years is just not going to fly. Nope.
I believe lots of members of Congress beat the Dow by several pctge. points every year
The odds of Flagpole beating the Dow 32 out of 33 or 34 years …
You are the one who doesn't understand probabilities. This is not flipping a coin. You're wrong, dude.
Sally my not understand probabilities, but it’s use over recent decades funded my retirement. Your pretend performance, while theoretically possible, is not remotely credible in any realistic statistical sense, as you well know. Or, again, maybe you DO NOT know, which makes you only innumerate, and not, by your definition, a liar, since you believe, hope or wish it to be true.
Flagpole, If I can cut to the chase, I think the unknowing error you are making is the same one that the majority of people would make, and most investors, for that matter. It is simply this: they don't fully understand what is in their mutual funds, and most growth oriented mutual funds are tech heavy. And in fact, even the S&P 500 is tech. heavy.
A couple of days ago I randomly picked one of the funds mentioned in regard to this discussion, looked it up, and it was something like 38% tech., and even more if you include communication sector. That is just an example. They all tend to be that way. And again, the SNP 500 index itself is tech. heavy.
I don't think you are alone in this presumption.
Excuse me if I am misrepresenting your understanding of your holdings in their entirety.
You questioning my returns really is rich as you have stated you have done better than I have (after me telling you have I have averaged right on 11% annual return since 1989). My returns are slightly better than average, and yet you have done BETTER than me but don't believe my returns? Meh.
Flagpole, i think you are confounding two different things: beating the DJIA in any given year and beating the DJIA over a given timeframe overall (over a timeframe like 10 years, 15 years, or since 1989, for example). This is a critical distinction. I hope you grasp that.
If I may use myself as an example, I have in fact beat the DJIA over a 20 year period, for example. But, (the crucial point here), I have not beaten the DJIA more than maybe 55% of the time in any given year of that 20 year period.
And if I were to check the last 36 years, I bet I would have only beat the DJIA maybe half the time, or say 18 out of the last 36 years.
Does this make sense? They are two very different metrics.
And FWIW, I don't care nor do I track how many years I beat any indices. I only care about the beating the indices over the long term - I know there will be up years and down years, I accept that, and instead focus on the long term.
What is the probability that an investor will beat the DOW in a given year? Hard to know, but we can look at Buffet’s Berkshire Hathaway as an example of what the objectively very best investor might achieve. That fund has beat the DOW somewhere less than 80% of calendar years, when I last checked. That suggests something like 80% chance, in a given year, for an acknowledged GREAT investor to beat the DOW.
The chance of him beating the DOW 32 years in a row would be 0.8^32, suggesting a probability of 1 in 1262. In other words, if you had 1262 imaginary Warren Buffets, one of them could beat the DOW32 years in a row. Now 32 years in 35 isn’t quite as demanding a test, but is of a similar order of magnitude.
So FP is claiming to be much better than the average imaginary Warren Buffet.
Sheer nonsense from a liar.
This explanation offered by nearly retired is exactly what I am talking about regarding trying to beat an indices 33 out of 36 years.
FP, please understand that you may have beat the DJIA by quite a bit overall for the last 36 years, but it is just about statistically impossible to do it for almost every year along the way. Two very different things.
You are the one who doesn't understand probabilities. This is not flipping a coin. You're wrong, dude.
Sally my not understand probabilities, but it’s use over recent decades funded my retirement. Your pretend performance, while theoretically possible, is not remotely credible in any realistic statistical sense, as you well know. Or, again, maybe you DO NOT know, which makes you only innumerate, and not, by your definition, a liar, since you believe, hope or wish it to be true.
Actually, I do understand probability. It has been a long time (sigh) but I passed the first 2 actuarial exams, the first being probability.
To give you an idea of how hard it would be to beat the Dow Jones Index (DJIA) most years based on an annual basis, I searched for a really good investors results, and Warren Buffet was mentioned earlier, so I chose Berkshire Hathaway, his investment company.
So, how many times has Berkshire Hathaway beaten the DJIA in annual performance in the last 20 years? We know that he is amongst the very best. Certainly better than FP, right?
Well, get this:
The Motley Fool wrote:
Over that two-decade span, it has beaten the Dow in 13 of the 20 years
So, FP has managed to do it in at least 17 of the last 20 years, and FP has beaten Warren Buffet's signature fund/company track record by an astounding 25% of the years in that time period.
tl/dr:
How many years beating DJIA on an annual basis in last 20 years:
Berkshire Hathaway: 13 of 20
Flagpole: at least 17 of 20
And furthermore:
Berkshire Hathaway has outperformed the DJIA 65% of the last 20 years, and
Flagpole has outperformed the DJIA 91.6% of the last 36 years.
To give you an idea of how hard it would be to beat the Dow Jones Index (DJIA) most years based on an annual basis, I searched for a really good investors results, and Warren Buffet was mentioned earlier, so I chose Berkshire Hathaway, his investment company.
So, how many times has Berkshire Hathaway beaten the DJIA in annual performance in the last 20 years? We know that he is amongst the very best. Certainly better than FP, right?
Well, get this:
The Motley Fool wrote:
Over that two-decade span, it has beaten the Dow in 13 of the 20 years
So, FP has managed to do it in at least 17 of the last 20 years, and FP has beaten Warren Buffet's signature fund/company track record by an astounding 25% of the years in that time period.
tl/dr:
How many years beating DJIA on an annual basis in last 20 years:
Berkshire Hathaway: 13 of 20
Flagpole: at least 17 of 20
And furthermore:
Berkshire Hathaway has outperformed the DJIA 65% of the last 20 years, and
Flagpole has outperformed the DJIA 91.6% of the last 36 years.
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