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Richmond Times-Dispatch Article on Index Funds
Old 01-10-2010, 08:06 AM   #1
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Richmond Times-Dispatch Article on Index Funds

I guess I've got it all wrong using index funds.

Article.
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Old 01-10-2010, 08:10 AM   #2
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Yeah. You would be much better off with equity indexed annuities or a huge whole life policy.
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Old 01-10-2010, 08:47 AM   #3
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But it does say:
Quote:
Yet, in the end, an index fund is still sometimes the best bet. "An index fund is better than having a badly managed active fund," Bold said.
Be careful, Brewer. Someone might take you seriously.
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Old 01-10-2010, 08:58 AM   #4
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From the article:
Quote:
Actively managed U.S. stock funds fell an average 39 percent in 2008, slightly better than a negative 39.2 percent for passive index funds, according to Morningstar Inc.
...
Quote:
In 2009, the average return for U.S. actively managed funds was 32.8 percent, compared with 31.7 percent for passive funds.
A different article covering the same 'active vs passive' topic and the same press release that comes with a different editorial slant:
Five Things Every Fund Investor Needs to Know - WSJ.com
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Old 01-10-2010, 09:22 AM   #5
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Quote:
Originally Posted by Ed_The_Gypsy View Post
But it does say:

Be careful, Brewer. Someone might take you seriously.
I will be happy to disabuse them.

Seems like we have had a deluge of annuity and insurance salemen lately. Dunno why, but it sure does get annoying after a while.
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Old 01-10-2010, 09:26 AM   #6
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Quote:
Originally Posted by GalaxyBoy View Post
I guess I've got it all wrong using index funds.

Article.
I'm not an indexer myself, but it's hard to take that article seriously. Pretty casual and anecdotal commentary and taking one year's slight performance difference and projecting it out long term is worse than useless. "Investor's need to seek out the best fund managers" - yeah right, like that's even possible to predict - what he is really telling you to do is to go chase performance. The article is patronizing and insults my intelligence.

I've found the "lost decade" articles about the S&P500 more interesting. But seriously, have people really been using only the S&P500 for their equity fund since 2000? Maybe so. But it seems like even in the early 2000s, Bogle was recommending that people use the Wiltshire 5000 (Total Stock Market) as their equity index fund, not the S&P500.

How many folks have been owning an S&P500 Index fund all these years?

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Old 01-10-2010, 10:22 AM   #7
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Originally Posted by audreyh1 View Post
How many folks have been owning an S&P500 Index fund all these years?

Audrey
For many 401(k) plans, the only index fund found in them is an S&P500 index fund. Many folks do not make any investments outside of their 401(k) plans.

I have had colleagues tell me, "I know that indexing is the way to go, so I only invest in the index fund in my 401(k) plan." This is scary because they do not even invest in a bond fund. That is, index fund investing is synonymous with S&P500 index fund investing.

Many of us have kids who are working and not thinking about retirement and a nest egg. You might ask your offspring what they invest in. You might be very surprised.
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Old 01-10-2010, 10:57 AM   #8
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I found these three lines particularly helpful.

Quote:
Some stood out from the rest, beating the index by 10 percent, Bold said. But even a 2 percent improvement over 30 years will make a material difference -- 60 percent more return, he said.
Shouldn't be hard, just pick an actively managed fund that will beat the market by 2-10%/year over 30 years, including fees and taxes (which were never mentioned anywhere in the story).

Quote:
Yet, in the end, an index fund is still sometimes the best bet. "An index fund is better than having a badly managed active fund," Bold said.
I guess so. Duh?

Quote:
A fund is only as good as the manager, he said, and investors need to seek out the best fund managers.
What a great idea!

How embarrassing! Even if I agreed with the premise, this is some pitiful writing from the paper I used to deliver as a kid.
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Old 01-10-2010, 11:09 AM   #9
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Shocking isn't it?
Quote:
"2008 was an extraordinary year and it's important for investors now to be looking at what we expect in the next 10 years, not what happened in the past when we were on the verge of a global financial collapse," said Adam Bold, who does a weekly Saturday broadcast on investing on WRVA radio in Richmond.
"In this environment, a well-managed active fund is likely to do better than an index fund," said Bold, CEO of The Mutual Fund Store, which has no index funds in its portfolio. Bold's Overland Park, Kan.-based company has an office in western Henrico County.
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Old 01-10-2010, 11:22 AM   #10
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People will say anything for attention and income!

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