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Old 08-18-2011, 08:07 PM   #21
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Funny you should mention Berkshire. By buying in 2001-02 and selling in 2008 we facilitated a big chunk of our early retirement and sent a child to college doubled our money.

I'm pretty happy we don't invest in the S&P500.
Again, take a look at a chart of S&P, same return, 800 in 10/2002, 1558 in 10/2007,
If you had bought Apple, it was 7.015, close today at 366.
Hmmm, you could have had a lot more children.
TJ
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Old 09-09-2011, 09:46 AM   #22
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Jack Bogle: Why Mark Cuban Is Wrong on Investing - MarketWatch Video

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Buying and holding stocks and bonds for the long term and maintaining a diversified portfolio are still the smartest strategies for the average investor, says Vanguard founder Jack Bogle in answer to Mark Cuban and other critics of these traditional approaches. In the Big Interview with Journal columnist Jason Zweig, Bogle takes aim at the culture of market speculation. Betting on long odds, he says, "doesn't pay off very often."
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Old 09-09-2011, 10:50 AM   #23
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Betting on long odds, he says, "doesn't pay off very often."
No, but it gives the appearance that winning the lottery is a matter of skill and determination. Never mind that the highly paid and highly motivated teams of analysts and portfolio managers, who do nothing else but study stocks for 80 hours per week, have access to insiders and technical trading flows, can't reliably do it, Joe Blow with a couple of extra minutes per day, CNBC, and a news letter or two can. Makes perfect sense.
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Old 09-09-2011, 10:52 AM   #24
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Of course, the irony is that Mark Cuban doesn't have to be right. He could take all of his investments in the market, blow it in Vegas, and still be filthy rich. Most of us don't have that luxury.

It's easy to take extreme risks (or take none at all) when you have so much money that neither a market crash nor lack of compounded growth can wipe you out.
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Old 09-09-2011, 03:08 PM   #25
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Makes perfect sense.
But it does make sense. You have a reason to make money for yourself, but a professional portfolio manager who could actually make money at it would have no reason to make money for you -- he'd be making it for himself.
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Old 09-09-2011, 03:13 PM   #26
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But it does make sense. You have a reason to make money for yourself, but a professional portfolio manager who could actually make money at it would have no reason to make money for you -- he'd be making it for himself.
Then why is the PPM wasting his time claiming to be able to make money for others instead of devoting all his efforts to making himself money? That makes no sense.
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Old 09-09-2011, 03:51 PM   #27
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Then why is the PPM wasting his time claiming to be able to make money for others instead of devoting all his efforts to making himself money? That makes no sense.
It makes perfect sense to claim to be able to make money for others. That makes your advice salable. It just wouldn't make sense to actually do it, except under the condition that the money you can make for others is sufficiently small that it wouldn't be worth your effort to get it for yourself. (Since I am often misunderstood on this kind of thing, I had better enter the disclaimer that I intend no more than my words actually say -- it makes sense for an amateur investor to think that he can do as well or better than a professional would do for him. I'm not saying it's true.)
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Old 09-10-2011, 02:38 PM   #28
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But it does make sense. You have a reason to make money for yourself, but a professional portfolio manager who could actually make money at it would have no reason to make money for you -- he'd be making it for himself.
Professional money managers get paid bonuses, the size of which is almost always performance based. Believe me, they often have millions of reasons to make money for the fund.

Also, the idea that "he'd make it for himself" assumes he has capital to invest. Beating the market by 200bp doesn't buy you much even with a six or seven figure portfolio. Do that for a fund on a realiable basis and there will be few things in life you can't afford.
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Old 09-10-2011, 03:42 PM   #29
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Beating the market by 200bp doesn't buy you much even with a six or seven figure portfolio. Do that for a fund on a realiable basis and there will be few things in life you can't afford.
But you said above that these professionals "can't reliably do it".
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Old 09-10-2011, 04:37 PM   #30
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But you said above that these professionals "can't reliably do it".
Just cause they can't doesn't mean they don't have incentive to.
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