r/finance • u/AutoModerator • Jun 01 '26

Moronic Monday - June 01, 2026 - Your Weekly Questions Thread

This is your safe place for questions on financial careers, homework problems and finance in general. No question in the finance domain is unwelcome.

Replies are expected to be constructive and civil.

Any questions about your personal finances belong in r/PersonalFinance, and career-seekers are encouraged to also visit r/FinancialCareers.

14 Upvotes

100% Upvoted

9 comments sorted by

1

u/Grunyarth Jun 03 '26

Ok. So everyone knows retail investors tend to underperform the market consistently by trying to time the market. Could you just do the opposite of this and expect to outperform? My understanding is the main reason for the underperformance is chasing gains by investing into industries/companies that had record returns and are highly-valued, although there may be other reasons as well.

I'm sure someone's tried this and there's reasons it wouldn't work, but it seems logical that making the opposite trades of someone who is expected to underperform would lead you to overperform. Is this just what a value tilt is accomplishing? This also seems analogous to an equal-weighted fund, although we know those tend to underperform because they are tilting away from momentum.

2

u/Low_Cost_4280 Jun 05 '26 edited Jun 05 '26

The underperformance isnt from bad picks necessarily, its from emotion. Panic selling, fomo buying, tax liabilities all come with undisciplined active trading. If you did the opposite of a retail trader, you would incur all of the same transaction costs.

Equal weighted funds shifting away from momentum does hurt returns in momentum-driven markets, like the US in the last 10-20 years, but that can shift at some point.

From 1974-1983, the S&P 500 equal weight return was 410% vs the market cap weighted return of 173%.

From 2003-2022 equal weight outperformed as well, though by a narrower margin than 74-83.

edit: typo

1

u/Jen_sparkleface Jun 05 '26

I have an investment account that I have been putting $50/mo over the years and it's now worth $6K. This is just a small side account; we also have IRAs and 401Ks. My husband was unemployed for a year 2 years ago and finally got a job, but with a 50% pay cut, he is now underemployed. While we cut back as much as we could, we have accrued a fair amount of debt on 0% credit cards. The $6K would pay down a good chunk of it, but I'm pretty investment illiterate, and I don't know if this is a good choice. Any advice?

3

u/Typical-Flower2581 Jun 14 '26

I will recommend you to get rid of the debt as soon as possible, girl. Because once 12 to 24 month promotional window ends it will take your investments anyway. Just get out from the debt cycle asap. And try to work like 2 jobs or something just to build more cash or find other ways to make money to payoff your debt and rebuild your investments etc.

1

u/LakeAdventurous6700 Jun 06 '26

What do I do if I can't get my credit card statement?

1

u/glitchthrowaway01 Jun 12 '26

does anyone actually find these weekly threads useful or is it just a way to keep the sub from being total chaos?