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InvisibledeadwkS
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Experience with robo-investor applications
    #26408650 - 12/31/19 02:36 AM (1 year, 1 month ago)

Has anyone here ever used robo-investor type applications like wealthsimple or mylo? I've known about them for awhile, and just recently decided to try one out. What's your experience with a robo-investor been like? I'm using Mylo right now, and the app itself is pretty great, very clean looking. Will have to see how the long-term profitability is however.


Edited by deadwk (12/31/19 02:37 AM)


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OfflineSempeur
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Re: Experience with robo-investor applications [Re: deadwk]
    #26461997 - 01/31/20 01:49 PM (1 year, 26 days ago)

I tried out Wealthsimple, they've got a very nice UI and reasonably low fees. I also liked their options to invest in more ethical companies if you're willing to accept some lower returns.

From all the ads I've heard the first $10K is managed for free, so if your bank has free transfers to outside accounts then you could probably try it out for very cheap (maybe just paying a withdrawal fee to get your money out if you don't like it).

I ended up going with a more self-directed system (manually buying ETFs via a trading service) but everything I've read about Wealthsimple sounded positive.


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InvisibledeadwkS
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Re: Experience with robo-investor applications [Re: Sempeur]
    #26465771 - 02/02/20 08:26 PM (1 year, 24 days ago)

Yea I thought that was a pretty cool feature of wealthsimple. The fees can definitely get a bit high, thankfully Mylo has pretty low fees. How long ahve you been buying ETFs for?


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OfflineSempeur
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Re: Experience with robo-investor applications [Re: deadwk]
    #26466604 - 02/03/20 12:31 PM (1 year, 23 days ago)

Quote:

deadwk said:
Yea I thought that was a pretty cool feature of wealthsimple. The fees can definitely get a bit high, thankfully Mylo has pretty low fees. How long ahve you been buying ETFs for?




I've been investing for just over a year now, did a bunch of research last January and decided that I'd go into Vanguard's growth oriented ETF, so it's heavier in stocks than it is in bonds. Vanguard was the first to put out index funds like that and they are still one of the best. They also have the lowest fees which is what I'm after in a long-term investment.


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InvisibledeadwkS
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Re: Experience with robo-investor applications [Re: Sempeur] * 1
    #26485777 - 02/14/20 07:07 PM (1 year, 12 days ago)

Solid choice. One of my friends in the finance world used to talk my ear off about Vanguard, seems like something I should actually start reading about.


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OfflineLogicaL ChaosM
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Re: Experience with robo-investor applications [Re: deadwk]
    #26485922 - 02/14/20 08:42 PM (1 year, 12 days ago)

So is robo-investor a computer program that trades your money automatically?


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InvisibledeadwkS
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Re: Experience with robo-investor applications [Re: LogicaL Chaos] * 1
    #26485948 - 02/14/20 08:55 PM (1 year, 12 days ago)

I think so yea. In the case of Mylo it automatically rounds up my purchase, and invests the spare change. I think there's a human element that decides what the computer program invests in based off your risk profile, and when signing up for Mylo you basically choose your risk profile and that's it.

I'm pretty sure there's funds that manage these systems, and oversee the computer programs, but how much or little human interaction there is with stuff like this I'm really not sure.


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OfflineSempeur
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Re: Experience with robo-investor applications [Re: deadwk]
    #26486988 - 02/15/20 02:02 PM (1 year, 11 days ago)

Quote:

deadwk said:
Solid choice. One of my friends in the finance world used to talk my ear off about Vanguard, seems like something I should actually start reading about.




The only thing that makes me nervous about Index funds like Vanguard's is this type of thing: https://www.bloomberg.com/news/articles/2019-09-04/michael-burry-explains-why-index-funds-are-like-subprime-cdos

This is coming from the same guy who shorted the 2008 subprime market crash. His argument is that these instruments have removed proper price discovery mechanisms from the market, basically injecting value into stocks that shouldn't be seeing nearly the amount of investment they currently are. In this view everything is currently way overvalued, which is backed up by big firms like Warren Buffet's Berkshire Hathaway (he's currently sitting on a cash horde of $128 Billion because there's "nothing to buy in this market").

But even investing with a robo service wouldn't get you away from this problem, so I'm just sticking it out.


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OfflineLogicaL ChaosM
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Re: Experience with robo-investor applications [Re: deadwk]
    #26486992 - 02/15/20 02:05 PM (1 year, 11 days ago)

Thats pretty badass. Can it be trusted? Will it ever make bad descisions for you?


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InvisibledeadwkS
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Re: Experience with robo-investor applications [Re: LogicaL Chaos]
    #26488583 - 02/16/20 05:25 PM (1 year, 10 days ago)

@Sempeur: Yea, there's a bit of risk to everything, just a matter of your tolerance for it.

@LogicaL: Can it be trusted? I think so. The companies running it seem to be backed by well known financial firms. Will it ever make bad decisions? Not sure, probably I guess.


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OfflineAz88
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Re: Experience with robo-investor applications [Re: deadwk]
    #26681308 - 05/19/20 04:46 PM (9 months, 3 days ago)

What robo companies are out there?

I just signed up for SoFi and set up auto investing of $300 per pay period in a few stocks.

My best advice is to probably stick with an SP500 or Dow Jones ETF. They are designed to go up. When a company under performs they get kicked out and replaced with a better performing company. Up, up, and away!


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OfflineAz88
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Re: Experience with robo-investor applications [Re: Sempeur]
    #26681313 - 05/19/20 04:47 PM (9 months, 3 days ago)

Quote:

Sempeur said:
Quote:

deadwk said:
Solid choice. One of my friends in the finance world used to talk my ear off about Vanguard, seems like something I should actually start reading about.




The only thing that makes me nervous about Index funds like Vanguard's is this type of thing: https://www.bloomberg.com/news/articles/2019-09-04/michael-burry-explains-why-index-funds-are-like-subprime-cdos

This is coming from the same guy who shorted the 2008 subprime market crash. His argument is that these instruments have removed proper price discovery mechanisms from the market, basically injecting value into stocks that shouldn't be seeing nearly the amount of investment they currently are. In this view everything is currently way overvalued, which is backed up by big firms like Warren Buffet's Berkshire Hathaway (he's currently sitting on a cash horde of $128 Billion because there's "nothing to buy in this market").

But even investing with a robo service wouldn't get you away from this problem, so I'm just sticking it out.




Can you summarize the article or post the text in the forum? I don’t have a bloomberg subscription...


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InvisibledeadwkS
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Re: Experience with robo-investor applications [Re: Az88]
    #26681322 - 05/19/20 04:51 PM (9 months, 3 days ago)

Just got my april statement back from Mylo, and since opening up the account in December 2019 my ROI to date is 5.71%. Pretty solid considering the state of the global economy right now. Definitely glad I opened this account and will be sticking with it long erm.


---

Quote:


What robo companies are out there?





This will really depend on where you live. In the states I'm not sure, but in Canada the main ones are Wealthsimple, and Mylo


summary of the article:

Quote:


For an investor whose story was featured in a best-selling book and an Oscar-winning movie, Michael Burry has kept a surprisingly low profile in recent years.

But it turns out the hero of “The Big Short” has plenty to say about everything from central banks fueling distortions in credit markets to opportunities in small-cap value stocks and the “bubble” in passive investing.

One of his most provocative views from a lengthy email interview with Bloomberg News on Tuesday: The recent flood of money into index funds has parallels with the pre-2008 bubble in collateralized debt obligations, the complex securities that almost destroyed the global financial system.

Burry, who made a fortune betting against CDOs before the crisis, said index fund inflows are now distorting prices for stocks and bonds in much the same way that CDO purchases did for subprime mortgages more than a decade ago. The flows will reverse at some point, he said, and “it will be ugly” when they do.

“Like most bubbles, the longer it goes on, the worse the crash will be,” said Burry, who oversees about $340 million at Scion Asset Management in Cupertino, California. One reason he likes small-cap value stocks: they tend to be under-represented in passive funds.

Here’s what else Burry had to say about indexing, liquidity, Japan and more. Comments have been lightly edited and condensed.

Index Funds and Price Discovery
“Central banks and Basel III have more or less removed price discovery from the credit markets, meaning risk does not have an accurate pricing mechanism in interest rates anymore. And now passive investing has removed price discovery from the equity markets. The simple theses and the models that get people into sectors, factors, indexes, or ETFs and mutual funds mimicking those strategies -- these do not require the security-level analysis that is required for true price discovery.

READ MORE ON BURRY:
Burry’s Picks of Undervalued Japanese Companies Jump in Tokyo
The Big Short’s Michael Burry Sees a Bubble in Passive Investing
Should Investors Worry About Burry’s Warnings on Index Funds?
“This is very much like the bubble in synthetic asset-backed CDOs before the Great Financial Crisis in that price-setting in that market was not done by fundamental security-level analysis, but by massive capital flows based on Nobel-approved models of risk that proved to be untrue.”

Liquidity Risk
“The dirty secret of passive index funds -- whether open-end, closed-end, or ETF -- is the distribution of daily dollar value traded among the securities within the indexes they mimic.

“In the Russell 2000 Index, for instance, the vast majority of stocks are lower volume, lower value-traded stocks. Today I counted 1,049 stocks that traded less than $5 million in value during the day. That is over half, and almost half of those -- 456 stocks -- traded less than $1 million during the day. Yet through indexation and passive investing, hundreds of billions are linked to stocks like this. The S&P 500 is no different -- the index contains the world’s largest stocks, but still, 266 stocks -- over half -- traded under $150 million today. That sounds like a lot, but trillions of dollars in assets globally are indexed to these stocks. The theater keeps getting more crowded, but the exit door is the same as it always was. All this gets worse as you get into even less liquid equity and bond markets globally.”

It Won’t End Well
“This structured asset play is the same story again and again -- so easy to sell, such a self-fulfilling prophecy as the technical machinery kicks in. All those money managers market lower fees for indexed, passive products, but they are not fools -- they make up for it in scale.”

“Potentially making it worse will be the impossibility of unwinding the derivatives and naked buy/sell strategies used to help so many of these funds pseudo-match flows and prices each and every day. This fundamental concept is the same one that resulted in the market meltdowns in 2008. However, I just don’t know what the timeline will be. Like most bubbles, the longer it goes on, the worse the crash will be.”

Bank of Japan Cushion
“Ironically, the Japanese central bank owning so much of the largest ETFs in Japan means that during a global panic that revokes existing dogma, the largest stocks in those indexes might be relatively protected versus the U.S., Europe and other parts of Asia that do not have any similar stabilizing force inside their ETFs and passively managed funds.”

Undervalued Japan Small-Caps
“It is not hard in Japan to find simple extreme undervaluation -- low earnings multiple, or low free cash flow multiple. In many cases, the company might have significant cash or stock holdings that make up a lot of the stock price.”

“There is a lot of value in the small-cap space within technology and technology components. I’m a big believer in the continued growth of remote and virtual technologies. The global retracement in semiconductor, display, and related industries has hurt the shares of related smaller Japanese companies tremendously. I expect companies like Tazmo and Nippon Pillar Packing, another holding of mine, to rebound with a high beta to the sector as the inventory of tech components is finished off and growth resumes.”

Cash Hoarding in Japan
“The government would surely like to see these companies mobilize their zombie cash and other caches of trapped capital. About half of all Japanese companies under $1 billion in market cap trade at less than tangible book value, and the median enterprise value to sales ratio for these companies is less than 50%. There is tremendous opportunity here for re-rating if companies would take governance more seriously.”

“Far too many companies are sitting on massive piles of cash and shareholdings. And these holdings are higher, relative to market cap, than any other market on Earth.”

Shareholder Activism
“I would rather not be active, and in fact, I am only getting active again in response to the widespread deep value that has arisen with the sell-off in Asian equities the last couple of years. My intention is always to improve the share rating by helping management see the benefits of improved capital allocation. I am not attempting to influence the operations of the business.”

Betting on a Water Shortage
“I sold out of those investments a few years back. There is a lot of demand for those assets these days. I am 100% focused on stock-picking.”





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OfflineGandalfSon
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Re: Experience with robo-investor applications [Re: deadwk]
    #26826076 - 07/16/20 12:26 AM (7 months, 8 days ago)

I’m not super familiar with the term robo-investor. Do these just automatically invest with your purchases as mentioned or are they automating sales/buying as well?

I’ve been looking into algorithmic trading recently. And it seems like it’s worth a shot but I guess that the actual nature of the program is important before I give a long, well-thought out but entirely irrelevant tirade lol.

If you’re app is just investing money through rounding up then it’s probably fairly good in the same sense that a swear jar or throwing your loose change in a piggy bank is.... nice easy thought free savings that add up over time. If your app is also conducting transactions then you should probably look into developing benchmarks so that you can make objective cconclusions regarding performance.


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InvisibledeadwkS
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Re: Experience with robo-investor applications [Re: GandalfSon]
    #26854196 - 07/30/20 08:46 PM (6 months, 24 days ago)

Quote:


Do these just automatically invest with your purchases as mentioned or are they automating sales/buying as well?





In the case of the app I'm using it invests the spare change from your purchases into ETFs. I haven't read anything about them managing the buying/selling of the investments for you.


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OfflinegeokillsA
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Re: Experience with robo-investor applications [Re: GandalfSon] * 1
    #26854488 - 07/30/20 11:54 PM (6 months, 24 days ago)

Quote:

GandalfSon said:
I’m not super familiar with the term robo-investor. Do these just automatically invest with your purchases as mentioned or are they automating sales/buying as well?




Generally speaking, these are investment allocations based on an algorithm that can contain any number of variables.  For example, you could have an investment algorithm based strictly on whether you have low, medium or high personal risk tolerance, and it will balance your total investment capital accordingly.  There may be another robo-investment platform that takes into account your age and investment time horizon, which can rebalance periodically, to ensure a specific mix of increased fixed income versus higher risk equity exposure as you get older.  There is no specific rule for what constitutes a robo-investor, it is a blanket term for programmatic allocation based on any number of variables that you can specify up front and modify over time.  There are no humans directly involved in the decision making for how your portfolio is allocated when using a robo-advisor/investor platform.


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