Chapter 69 [Three Questions about Investment]

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[James’ Origin and Today] Chapter 69 - [Three Questions about Investment] (09/28/2023)

Question 1:

I see that recently (2019) SPY/QQQ, etc. are at high levels. Should I buy an ETF with high dividends and low volatility like VYM when entering the market? Because the market is already at a high level now, the next correction should be very strong, right?

Answer 1:

We cannot predict the market! Some people claim to be able to predict the market, but we admit that we are not.

You can invest in SPY, QQQ, or VYM, but you must consider long-term returns, not short-term risks!

If QQQ has increased tenfold in ten years, SPY has increased eightfold, and VYM has increased fivefold.

Which one is a good investment for long-term investors?

Short-term things, like the probability of a meteor appearing, are often unexpected. No one knows. Long-term returns are the probability and expectation value, and they can be predicted! Don’t pretend that you know what the market will do in the next two or three months! If you knew, you would be as rich as Buffett in no time! But this is not realistic, it can only be said to be delusion and dreaming.

Question 2:

I just feel like I always make a bit of a loss when buying at high prices. . .

If divided is included, the overall return rate of SPY/QQQ/VYM or even KBWD (yield 8.65%; YTD return 18.31%) is similar?

Answer 2:

You decide which one to invest in. If you feel that the stock price is high, it will be higher in the future. Long-term QQQ SPY rate of return is the best investment. If it is operated perfectly, it can certainly surpass QQQ SPY. The key is "perfect operation."

It is really not easy to operate it perfectly. If you have this ability, congratulations. It's relatively simple to imagine. Operators understand ROI rather than long-term ROE.

In a word, long-term investors should not consider short-term risks (good cash flow management is more important than anything else). Long-term profits are the focus of our investment. It is not easy to gain benefits through operation, and few succeed.

Every time there's a big short or a big move, Buffett is the butt of ridicule.

Question 3:

QQQ always has a higher return rate than SPY, so SPY has very general meaning to us. Is there anything wrong with this judgment?

Answer three:

As long as you can accept that short-term QQQ shocks are greater than SPY; long-term QQQ returns are higher than SPY. When investing, you must first know what you want!

I usually recommend thinking like this: "Focus on long-term returns, ignore short-term shock risks, and buy without operating."