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No man, don't you get it? His strategy of day-trading the indices has only lost half as much as a buy-and-holder would have over the past two months. Can't argue with a record like that.
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 6,438
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Originally Posted by AirJordan
And then I sold it, because I realized I am in fact smart than the indexers
YTD -1.1%, take that haystackers
VGTSX, VFINX both down over 2.5%
Avocado...
__________________ Have Funds, Will Retire "...but do feel free to assert your duly noted opinion on this subject again without benefit of reference or provision of additional information..."
Saw this today.... bold added by me... but they got AJ!!!
PAUL B. FARRELL
You're saving 'too much' for retirement!
As a result, Main Street is now in a no-win situation. Jack Bogle's famous "Iron Law of the Markets" puts this assets-based monster in context with his new "Little Book of Common Sense Investing:" "Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser's game."
Bogle has had a consistent solution to the "Iron Law" dilemma for three decades: "The simplest and most efficient investment strategy is to buy and hold all of the nation's publicly held businesses at very low cost. The classic index fund that owns this market portfolio is the only investment that guarantees you with your fair share of stock market returns." We've put this strategy into action with our lazy indexed portfolios. See how the lazy portfolios have beaten the market.
Unfortunately, Wall Street understands the "Iron Law" better than Bogle! Wall Street knows it cannot charge big management fees off low-cost index funds. So Wall Street is relentlessly hypnotizing investors into believing that actively managed funds beat the indexes even though about 80% fail to do so, largely because their average expense ratios are 10 to 15 times the fees charged by index funds.
really, i am serious. wouldn't a good manager be able to beat an index fund? wouldn't a manager be able to spot problems with individual stocks, etc?
The problem with good money managers (and those available to the public) is that they are saddled with huge inflows of capital from people seeking higher returns - i.e. chasing "hot" money - and it usually forces the mm to A) buy overpriced stocks and B) reduces the number of potential investments - a huge fund can only make sizable stakes in huge companies. Skill is not always the Achilles' heel.
__________________ "These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
Unfortunately, Wall Street understands the "Iron Law" better than Bogle! Wall Street knows it cannot charge big management fees off low-cost index funds. So Wall Street is relentlessly hypnotizing investors into believing that actively managed funds beat the indexes even though about 80% fail to do so, largely because their average expense ratios are 10 to 15 times the fees charged by index funds.
There will always be people who think they can be the other 20%.
__________________
May we live in peace and harmony and be free from all human sufferings.
really, i am serious. wouldn't a good manager be able to beat an index fund? wouldn't a manager be able to spot problems with individual stocks, etc?
The market is very efficient; that is, as soon as info becomes available, everyone can act on it immediately. Thus, it is very, very difficult to exploit the information unless you have access to it before everyone else. There will always be managers who can beat the market, but can the same managers beat it on a consistent basis (or year after year)? The answer is simply no. It will be some other manager's turn next. Once they do, money will follow them.
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May we live in peace and harmony and be free from all human sufferings.
really, i am serious. wouldn't a good manager be able to beat an index fund? wouldn't a manager be able to spot problems with individual stocks, etc?
NYL
You might want to read the Four Pillars by Bernstien or Bogle's books. The short story is:
Efficient Market Hypothesis This is a large part of the theoretical argument for passive management and against persistence of mutual fund returns. The developed world's equity and bond markets are quite efficient. This means that there are many intelligent rational people trying to maximize their wealth and that relevant information about securities travels extremely quickly. In other words, everybody else already knows everything you think you know about a particular security and they have already taken advantage of that information (and eliminated any opportunity that may have briefly existed to take advantage of that information) before you (and I) get a chance to.
__________________ Hope springs eternal in the human breast:Man never is, but always to be blest. The soul, uneasy and confined from home,Rests and expatiates in a life to come.
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