Presentation PloutosNX

[PloutosNX]

Hello everyone,

I consult the site regularly and particularly the forum to find some answers to my questions. It is indeed rare to find information for Switzerland.

It's always difficult to talk about yourself and introduce yourself without boring everyone and without providing empty content.

So my name is Xavier, married with a child of a few months, I am in the middle of my working life. Concerning the theme of the site, namely the financial domain, independence, etc., we have real estate, money in the fund and savings that are sleeping...

The interest in the stock market came to me almost 2 years ago in a roundabout way. I am an engineer by training and blockchain technology had caught my attention a long time ago (in 2011, 2014), but not having taken the time to understand it and having other projects I had capitulated each time. However, in early 2017 having more time, I dove back into it and discovered a world more interesting than my first impression, but of course I stayed on the technical side... Then there was this famous bubble of late 2017-early 2018 and I started to ask myself more questions but on the economic side, because this went against the basic principles of Bitcoin to name just one, so I had to take an interest in the general economy and particularly in the stock markets.

This is why I am here today I think, because I discovered that it is very good to have real estate, money in a fund and savings, but as it stands this does not allow you to live better or in other words to be able to enjoy it in the long term.

Having a penchant for technology and therefore math in general, I immersed myself in the fundamentals of compound interest and ways of investing to optimize losses/gains. I consequently discovered that the stock market is not limited to company shares that go up and down, but also to indices and that these are "purchasable" thanks to ETFs (with a thought for John Bogle). So I started looking for those that could correspond to my expectations, but I was confronted with the costs of the banks that were going to "eat up" (sorry but I don't have any other more accurate words), a large part of the regular investments, hence my coming, because I am sure that you will be able to help me with this point and certainly on others to which I have not yet been made aware.

I hope this introduction was not too long. I will open another thread to ask my questions about brokers in the right part of the forum.

I already thank our host, Jérôme for the very interesting work and the knowledge he shares here and also for maintaining the site.

Xavier

[Jerome]

Thank you and welcome Xavier.

You've already taken some interesting steps with real estate. It's a good first step. I'm surprised in a good way that the bitcoin \ blockchain universe is interested in value investing. Back to basics is back to basics!

ETFs are a good second step after real estate. They're a good way to start out and diversify a portfolio. But beware: contrary to appearances, they are no less risky than equities - quite the contrary. Especially as they cost more. After that, you'll still need to get to the heart of the matter: equities.

All the best to you.

[PloutosNX]

Hello Jerome,

Thank you for this welcome message.

I am well aware that ETFs are not less risky than stocks, their only advantage is to have a range of stocks directly in one package. But as you say, this allows you to become more familiar and then perhaps move on to stocks.

Regarding their cost, I find it reasonable (between 0.1-0.3%), but what you have to look at is how they are managed, here is the link to a very interesting article https://www.investir.ch/article/ameliorer-la-performance-du-sp-500/ .

Looking forward to reading you and being able to share on this subject with other people.

Xavier

[Jerome]

Precisely. The risk of ETFs is not where you think it is. It's hidden.

You say the cost isn't huge, with 0.3% or less. That's true. But you have to realize that there's a lot of manipulation behind these low rates, which is well explained in your article. We even see in the case of Invesco that their manipulations are so good at artificially lowering management costs that they even improve the profitability of the underlying index! You're a scientist, you know that 2+2 will never add up to more than 4.

How does one arrive at this paradox? Your article talks about it too. What's best known, and I've already mentioned it in one of my previous posts (see below), is that the positions that make up the ETF are lent to third parties, for example to carry out short sales. What happens if the third party is no longer able to honour its claim...? Oops... The other point, as seen at Invesco, is the use of swaps. So it's a derivative...!

Some people say that ETFs are the next subprime crisis. I wouldn't go that far, but you need to be aware of the risk, and not just focus on this type of instrument. Diversify! That's the key to the stock market.

 

 

See also:

How to diversify your portfolio to avoid market risks (18/20)

How to diversify your portfolio to avoid market risks (19/20)

https://www.dividendes.ch/2017/08/comment-diversifier-son-portefeuille-pour-se-prevenir-des-risques-de-marche-20/

[PloutosNX]

Hello Jerome,

Thank you for this remark and you put your finger on a point that I had not yet considered.

I think you are right about the risk, however there are nuances and some ETFs are certainly better and safer than others. I need to analyze these different points.

Of course diversification is the best solution, however I am not yet trained (and comfortable/confident) enough to do it.

My idea is to start with this ETF "ishares core msci word" and define other ETFs or actions for the future.

Good day,
Xavier

[Jerome]

Yes, starting with an ETF of this type is a great way to start!

[Author]

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