The Big Investment Lie (excerpt)

[twaddle]

Not seeing how this would clearly be a ten year market beater.

So you're saying we can't see 10 years into the future? Erhm, hard to argue with that I guess.

We'll have to revisit this thread in 10 years, and then we'll have "proof," right?

Like I said, "the market" isn't bad. You're pretty much guaranteed to capture GDP growth once the speculative component goes away. But it doesn't seem that hard to find growth > GDP. And there's always the Fama & French approach....

 

[lswswein]

Buffett is looking at longer periods of time, not year-to-year. His writings clearly indicate a preference to earn a "lumpy 15%" over time than a "smooth 12%."

From the owner's manual:
http://www.berkshirehathaway.com/ownman.pdf

9. [FONT=Times New Roman,Times New Roman]We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained. To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely. [/FONT]

We continue to pass the test, but the challenges of doing so have grown more difficult. If we reach the point that we can’t create extra value by retaining earnings, we will pay them out and let our shareholders deploy the funds.


Ziggy, I think we are saying the same thing. I understand that Buffett is the extreme case of lumpy returns and it does not faze him a tiny bit and I love him for that. (Btw I own BRK in my 5% "play money" stock account.) All I am trying to say is that for any Mutual fund to beat the rolling period outperformace is almost impossible and so you either buy Index funds or go with Buffett.

Btw twaddle, I just need the fund to beat benchmark in more than 50% of all possible rolling periods. Failing to beat it once or twice is not a big deal. Btw for the health care fund - S&P is not a good benchmark though convenient, but we could go with that. All that this proves is that finding a great MF is really difficult.

-h
pssst Wellesly.................

 

[twaddle]

Btw for the health care fund - S&P is not a good benchmark though convenient, but we could go with that. All that this proves is that finding a great MF is really difficult.

Well, I chose that fund because it was one of two I've held for 20+ years. (The other one has a large chunk of Japan and sucked badly).

In theory, a fund simply needs to beat the market one year, and then switch to buying the market, and it will have beaten the market over 10 years. In other words, I don't get what all the fuss is about.

It seems the real enemy is fund bloat. Even Buffett has too much cash due to his success. For small investors like us, it might be much easier to beat the market. Just ask Ha.

 

[FinanceDude]

Well, I chose that fund because it was one of two I've held for 20+ years. (The other one has a large chunk of Japan and sucked badly).

In theory, a fund simply needs to beat the market one year, and then switch to buying the market, and it will have beaten the market over 10 years. In other words, I don't get what all the fuss is about.

It seems the real enemy is fund bloat. Even Buffett has too much cash due to his success. For small investors like us, it might be much easier to beat the market. Just ask Ha.

I'll agree with that. Two of my significant fund holdings are ABALX and AIVSX. They have NOT beaten the market every year, but the beta is WAY under 1.00, and I have made enough money in the past 15 years to keep them both...........