A Newbie Guide to Investing

[LionFlyer]

I am on reddit and it seems most of the younger folks outright discourage stock picking and focus on index investing with the mantra of "DCA on VWRA and chill".

The common reasons given are:
1) Most retail investors would not be able to outperform the market
2) No one really has the time these days to analyse individual stocks
3) Globally diversifed indexes offers a wide variety of choices (CSPX, QQQ, VWRA) with the usual caveats
4) Limited options in Singapore. Moribund market.

The other group would advocate that if you are young, looking for growth, skip Singapore altogether and go to the biggest market, the US. Generally, stocks there offer high growth (ROE).

When I started investing (early 2000s), such options wasn't available. Access to foreign markets are expensive with limited number of platforms offering them. Also USD is pretty expensive back then.

Given such attitudes, I am curious; if we study trading volumes versus age, would it be mostly the older/mature investors (excluding institutional investors) trading on SGX?

[weijian]

Hi LionFlyer,

Ben Graham experienced the Great Depression and wrote The Intelligent Investor teaching us to buy a dollar for pennies. Many home owners got burnt in AFC1997 and swear off property investing. As for equities, many older folks experienced the 2000-2002 double bear markets and a 50% dip during GFC2008 - so this cohort probably doesn't have total faith in DCA or the cleverer ones (or at least they think they are) decide that market timing is a highly profitable activity.

I personally know a guy in his 70s who swear off equities because he thinks the market is a ponzi scheme. No surprise he thought that way because he lost in a pump-and-dump when he started equity investing. So, we are a product of our own unique experiences and therefore, each generation will have their own (experience).

When something is abundant, then it is our duty as investors to ask "what is scarce?". Finally, in the last 5 years, Buffett has had big sums invested with the Jap trading houses despite saying everything good about US. As usual, we learn from what he does, not what he says.