I just bought VFINX today
- Thread starter AirJordan
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Cut-Throat
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Hey AirJordan is that Hot Air ? 
newyorklady
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he actually has a point about the index funds.
Gone4Good
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newyorklady said:
What, that he's smarter than an index fund?
3 Yrs to Go said:What, that he's smarter than an index fund?
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.
HFWR
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AirJordan said: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...
Texas Proud
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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.
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.
newyorklady
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then why do people buy managed funds? this makes no sense to me at all.
Cut-Throat
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newyorklady said:
They are smart! - Like AJ!
newyorklady
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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.
Cut-Throat
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newyorklady said:
I suggest you read "The four Pillars of Investing" by William Berstein. All of your answers will be in there.
Spanky
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Texas Proud said:
There will always be people who think they can be the other 20%.
Spanky
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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.newyorklady said:
NYLnewyorklady said:
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.
Also check the reference papers at the link below:
http://altruistfa.com/readingroomarticles.htm#EfficientMarket
-h
brewer12345
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newyorklady said:
I work for an asset manager with a very, very good track record. It is not easy to spot problems before they happen. The world can change quickly (as the market slump that started suddenly a week ago illustrates), and it is not always that easy to figure out what is going on within a company based on public information. Then if we are talking about a mutual fund, there are a lot of constraints that keep you from doing what you might otherwise choose to do. If you actually do beat your benchmark, you usually get flooded with money. We had close to $100MM in new cash show up on our doorstep at the beginning of this year. Imagine trying to find a place to put that. Now make it $1 billion or $10 billion.
ERD50
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newyorklady said:
I see others type faster than me. Oh well, here is my 2 cents -
Seriously - no. Or at least not often enough and regularly enough to overcome the costs.
Because, that manager would need to spot problems that the rest of the market is overlooking. How do you really do that, other than with inside (illegal) info? Sure, you might be able to see that a certain industry or a certain company is headed for bad times, but guess what? The market sees it too, and the stock price has already tanked.
Conversely, if a company is situated to do well, the market sees that, and has already bought up the stock and it is no longer a 'bargain'. A fund manager can interview and research, but do they really get any info that tells them a company is doing something other than what everyone else thinks? Maybe once in a blue moon.
Heck, even the insiders in a company rarely have an idea where the stock is going. They get blind-sided all the time - an unpredicted shift in demand, a sudden rise in costs, a new product from a competitor.
But, I'm all ears. If anyone on this forum has some data to show there is a method for picking mutual funds based on past performance that will act as a predictor of superior future performance, I sure would like to see it.
AFAIK, no Nobel laureates or other Economics PhD's have discovered it either.
-ERD50
ERD50
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Spanky said:
Which would be fine if it were the *same* 20% over time. But they keep rotating out - today's winner may well be tomorrow's loser.
Heck, if it were easy, everyone would do it (which would then dilute the advantage!). Or at least, someone would be selling an expensive seminar telling you how to do it....
-ERD50
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lswswein said:Time for the Weiner heads to show up :
-h
