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Comment Re:The Stock Market is a Joke (Score 1) 218

The market as a whole has gone up, long term, since there have been stock markets. Not just in the US and not just in the 20th century. Certainly not individual shares.

You're looking at it through the lens of survivorship bias. How do you think you'd have done if you'd invested in 1913 on the stock markets of Spain, Germany, Japan or Argentina?

Comment Re:The Stock Market is a Joke (Score 1) 218

Except the market isn't random. It goes up, long term.

No, not necessarily. You're extrapolating from the US stock market's performance in the 20th century. This is not a representative sample. Stocks may very well go down long term. Of course, if that happens, you will probably have bigger problems to worry about than "my stock index funds have been tanking for 20 years," so I suggest don't let this stop you from long term stock investing—which is meant to protect you from the risk of long-term inflation, not from long-term societal collapse.

Comment One more thing (Score 1) 218


I feel inclined to call the DJIA "retarded," but that's unfair to the people who invented it in 1896 and expanded it in the 1920s (from 12 to 30 stocks). Back in those days, it wasn't that terrible of an idea.

I think I should expand on this. Back in 1902, a stock broker in the NYSE could calculate the DJIA by pencil in the back of an envelope: add the current prices of those 12 stocks up in the board and divide by 12. When it expanded to 30 stocks in the 20s it became that much harder, but you still could pay a guy to do it by hand and put up the updated values periodically up in the board. The jump to capitalization-weighted indexes with 500+ stocks was only possible with computers.

Comment Re:DJIA is (Score 1) 218

Eh.. I don't really understand this.. if they were to split at noon tomorrow, $412 worth of apple stock would still buy roughly the same fraction of apple afterward as it did before, wouldn't it? Is the DJIA an unweighted average based solely on share price? How is that even remotely useful as a metric?

IIRC the DJIA only applies weighting to stocks that split after inclusion in the index, in order to keep the index price reflecting the actual changes in the companies.

I feel inclined to call the DJIA "retarded," but that's unfair to the people who invented it in 1896 and expanded it in the 1920s (from 12 to 30 stocks). Back in those days, it wasn't that terrible of an idea. But really, since the introduction of the S&P 500 in 1957, and total market indexes in the 1970s, there's really no point to it, and the fact that people keep reporting it is just retarded. The Wilshire is a more reasonable index—it just includes basically every US domestic stock.

Comment Re:The Stock Market is a Joke (Score 1) 218

If you had invested in the DOW in Apr 2009, you would have made money

Everybody can make money in hindsight.

Well, as somebody who bought a lot of stock between October 2008 and April 2009, I have to point out that there is a disciplined approach to doing this: (a) set up your finances so you don't have to sell during crises (live below your means; set aside an emergency cash fund; have good insurance); (b) have a well-defined asset allocation plan (e.g., 25% bonds, 75% stocks with 40% US and 35% international); (c) when one asset class falls drastically, sell off one of the others to bring the portfolio back to plan (this is called rebalancing).

That way, if stocks fall 40% and your portfolio ends up at about 35% bonds/65% stocks, you sell the extra 10% in bonds and buy stocks to restore the 25/75 target. More generally, this forces you to sell off investments that have risen to buy those that have fallen—a strategy that's made of pure win...

Comment S&P isn't that great for funds either. (Score 1) 218

If you want a better investment strategy, use the S&P 500.

Actually, not this either, because the S&P was designed before index funds too, and isn't ideally suited to them. The S&P has a committee that unpredictably handpicks which stocks go into it, and when a new one enters the index, a lot of people buy them up because the S&P index funds are forced to buy it.

A better simple idea is just to buy an index fund that invests on the whole US stock market—e.g., Vanguard's Total Stock Marked Index funds. It's also more diversified—3,500+ stocks instead of just 500.

Comment Re:Stupid algorithm (Score 1) 218

Market Cap seems just as arbitrary a figure as anything.

No, a market-cap weighed portfolio has the advantage that it doesn't need to be rebalanced when the prices of the stocks change.

What surprises me is that a fund like the DJI which prides itself on being a "stable" fund would elect to not include someone because the share price is "too high". It is a fund... it's not like investors get a 1:1 share purchase of any company within the DJI. If they are afraid of "what if it goes down", than only buy a smaller percentage of Apple and more in Company-XYZ to help to mitigate risk.

The Dow isn't a fund. It's an index—and it's over a hundred years old, which is the reason why it's so antiquated.

Comment Re:50 Year Anniversary? (Score 1) 74

"50 year" is an adjectival phrase. It's an anniversary. The kind of anniversary: "50 year". AKA "50th anniversary".

If you're going to be pedantic, be correct.

...no, it's not an adjective phrase. If it was, you'd expect to be able to use it as a predicate. You can say both "a very large house" and "The house is very large." You can say "the 50-year anniversary" but not "*the anniversary is 50-year."

"50-year anniversary" is just a noun-noun compound, like "systems engineer" (where, likewise, you can't say "*That engineer is systems").

Comment Re:Because all businesses make sane decisions (Score 1) 734

Imagine if New York hadn't been allowed to have paved roads until there was a plan in place to pave the entire Western frontier.

Well, we actually did build not just one, but two highway systems that were designed to connect the whole country from the beginning. So yeah, actually, a lot of freeways in New York were not funded until there was a plan in place to build counterparts throughout the country. (Fun facts: first state to sign a contract to build an Interstate highway: Missouri. First state to start actually building one: Kansas. First state to open a segment of one: Pennsylvania. First state to finish all of its route: Nebraska...)

Comment Re:PR Is just a step up from a 3rd world country (Score 1) 202

Georges actually shook my house (like an earthquake) and it was a cat2 I don't want to know what a cat4/cat5 will do to us.

I remember back in 1995 or so when a hurricane warning was issued for Hurricane Luis (Cat 5). Governor Rosselló held a live press conference on TV, and you could tell from his face that he was scared shitless.

Comment 1,464 hurricane deaths in a first world country (Score 1) 202

Katrina was a big storm, but not ridiculously so. What destroyed New Orleans was flooding made extra destructive by the fact that the city is below sea level.

...and what killed 1,464 people is that neither the city, nor the state, nor the feds had any freaking plan for evacuating people out of the city who couldn't do it by themselves. And that would've never happened in Puerto Rico. I mean, (a) classify the areas of the city beforehand by their vulnerability to a flood, (b) when the hurricane warning is issued, send out dudes in vans and buses to the most vulnerable places to order the residents out and take to shelters the ones who can't get out on their own.

Comment Don't exaggerate. (Score 1) 202

Note that Irene has been no joke in the Caribbean; in Puerto Rico (with relatively modern infrastructure), about a third of the island lost power.

Dont fucking insult me. Relatively modern infrastructure? We don't build our buildings with fucking wood and gypsum board... We use armed concrete... that is why we can take a Category 5 Hurricane (like Hugo) or Category 4 (like Georges or Katrina) and survive it without the DRAMA the US experienced with Katrina... When we get a hurricane like that, we receive it with Don Q Rum and in a Beach Chair...

Bullshit. I was there for Hugo and Georges. Hugo when it hit PR was a category 3, but it barely scraped the northeastern tip of the island (close to Fajardo). The Vieques and Culebra islands got hit the hardest, followed by the eastern municipalities, and the rest of the island got off easy. My street was without power for over a month afterward.

Georges was category 3 when it hit PR, too, not a 5. That did cut diagonally right through the middle of the main island. My parent's house lost a crappy zinc roof used in an extension that they should've never made to the house.

Now If you had said that the island was a step up from a third world country, I couldn't agree with you more... If the goverment agencies did their job right one third of the island wouldn't have lost power and water for more than a day... The services down there are such a fucking joke compared to 20yrs ago when a Category 5 Hurricane would cause the same inconveniences that this Category 1 hurricane caused.

Dude, 22 years ago when Hugo hit I was without power for a whole damn month. And I lived in a middle upper class neighborhood.

When it comes to hurricanes, the guys in PR who've got their shit down are Defensa Civil—the government emergency preparedness agency.

Comment Re:Puerto Rico (Score 1) 202

I think we are the only country in the world that actually roots for a hurricane to come because it means there will be a chance to not go to work and still get paid LOL!

Eh, there's no lack of poor country folks living in houses built on flood zones in PR, and they're terrified of hurricanes.

The government however is very good at going to the most dangerous flood zones and actually evacuating people. If the PR government had been in charge of New Orleans, there would have been only a few dozen deaths from Katrina...

Comment Yup. (Score 1) 614

I'm from California, and live here still; a 5.8 would be all over the news unless it was in the middle of East Bumfuck, San Bernardino County. [...] So yes, I know that in California we generally take these things in stride (though I guarantee you would be talking about a 5.8 if it hit near you), but just quit with the bullshit.

Yup. The most recent comparable earthquake I can recall here in the San Francisco Peninsula was the 2007 Alum Rock Earthquake, a 5.6. It was very noticeable, many people stopped working and spent the next 10 minutes chatting about it and browsing the web for information about it. It was a minor nationwide news story, meriting an AP story and brief mentions in CNN and the likes, and there were a few local stories the next day about the minor damage close to the epicenter. But then after that nobody really talks about it anymore.

A 5.9 in the east coast, well, that's a modest quake, but it's also a "Man bites dog" story.

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