Yale's top investor belongs on ER Forums

[Meadbh]

http://www.nytimes.com/2008/02/17/bu...=1&oref=slogin

[CybrMike]

seems kind of silly though.

"I can beat the market with all my fancy stock and manager picking, but no one else can so they should just invest in index funds."

[W2R]

Quote:

Originally Posted by Meadbh http://www.nytimes.com/2008/02/17/bu...=1&oref=slogin

That was encouraging! Thanks, Meadebh.

[W2R]

Quote:

Originally Posted by CybrMike seems kind of silly though. "I can beat the market with all my fancy stock and manager picking, but no one else can so they should just invest in index funds."

I thought he was implying, "Nobody can beat indexing, but I'm not going to SAY that point blank since people who make their money in this industry would take offense".

[Meadbh]

I interpreted his discussion as caution on the risks, fees and taxes associated with alternative investments such as hedge funds, except for the megarich. For Mr or Ms Average, he is clearly in favour of indexing.

[unclemick]

Quote:

Originally Posted by CybrMike seems kind of silly though. "I can beat the market with all my fancy stock and manager picking, but no one else can so they should just invest in index funds."

Now now - remember Clint Eastwood - "A man's got to know his limitations."

So how many posting here live/breathe it 24/7 and have it as their day job and are given many millions of other people's money and thus can assemble/gain access to the skill sets required to pull it off.

Given male hormones - you know you're gonna try. Look how many golf.

Index funds maybe the horse I rode in on - doesn't mean I haven't been putzing for forty years(not golf) - but no book, nor do I book speaking engagements or give interviews.

heh heh heh - we do have a few financial types who post here. As for me - Tiger Woods and Warren Buffett can breath easy. .

[saluki9]

Quote:

Originally Posted by CybrMike seems kind of silly though. "I can beat the market with all my fancy stock and manager picking, but no one else can so they should just invest in index funds."

If you compare his resources to those of the average professional investor let alone individual it doesn't seem silly at all.

[bigla]

I listened to Bob Brinker in Jan. 2000 and got out of the market, sving my portfolio from a severe beating. I listened to him again in Mar. 2003 when he said get back in and we had a great run until recently. He still remains fully invested and I am more likely to stay the course with my diversified portfolio than not. But like Unclemick says, sometimes "hormones" a/o emotions lead us to make decisions.
Larry

[mathjak107]

Quote:

Originally Posted by Want2retire I thought he was implying, "Nobody can beat indexing, but I'm not going to SAY that point blank since people who make their money in this industry would take offense".

correction: no one can beat indexing in an up market

[myself]

I found it rather interesting that he criticized Jim Cramer who is basically suggesting that people can achieve the same levels that fund managers do.
Imagine, finding FSLR at $74, and waiting for a few weeks to get out at $214. Yeah, I guess I'm a fool.
Not to say that getting some GOOG and selling it at a small loss ($800) didn't hurt a little. So, yes I'm not perfect (much like the mutual fund managers).
I guess I'll have to see what happens over this year.

[saluki9]

Quote:

Originally Posted by myself I found it rather interesting that he criticized Jim Cramer who is basically suggesting that people can achieve the same levels that fund managers do. Imagine, finding FSLR at $74, and waiting for a few weeks to get out at $214. Yeah, I guess I'm a fool. Not to say that getting some GOOG and selling it at a small loss ($800) didn't hurt a little. So, yes I'm not perfect (much like the mutual fund managers). I guess I'll have to see what happens over this year.

Do it for 20 or so years and then come back to me.

[saluki9]

Quote:

Originally Posted by mathjak107 correction: no one can beat indexing in an up market

Now all you need to do it tell me where the market is heading.

That should be easy!

[FinanceDude]

Quote:

Originally Posted by mathjak107 correction: no one can beat indexing in an up market

Gotta agree 100% with that..........

[FinanceDude]

Quote:

Originally Posted by Want2retire I thought he was implying, "Nobody can beat indexing, but I'm not going to SAY that point blank since people who make their money in this industry would take offense".

That's not what he was saying..........he's saying he has tools that most of us can only dream about, and unheard access to fund managers and equity analysts.

I doubt he cares about the general financial advising industry........

[myself]

Quote:

Originally Posted by saluki9 Do it for 20 or so years and then come back to me.

In 20 years or so, I'll be in retirement (although I probably won't declare retirement until 67.

Besides, I believe that fund managers effectively direct the markets, since they have such large funds to redirect at a whims notice.

[myself]

Quote:

Originally Posted by saluki9 Now all you need to do it tell me where the market is heading. That should be easy!

If you want a guestimate (much like anyone else can give), I'd say the market is heading lower. It'll probably bottom out when the DJIA hits about $11,500, but that won't be until just before the next Fed meeting.

[Running_Man]

Quote:

He says it is fruitless for individual investors to pick stocks. “There is no way that an individual can go out there and compete with all these highly qualified and compensated professionals,” Mr. Swensen said.

This is where I disagree with individuals such as Mr. Swenson. Some such as Bernstein are going further, suggesting the government should ban Wall Street investing in retirement accounts and only allow indexing as it is an impossibility to beat the market as an individual.

The common refrain from the doubters is as Suluki9's who state "show me how you beat it after 20 years" Could someone please show me what Bernstein or Swenson were suggesting 20 years ago? Has anyone followed the same indexing strategy for 20 years? I know that back through 1995-1998 the prevalant suggestion from indexers was that a mixture of bonds and S&P500 would outperform any managed fund due to their international exposure and growth potential. Now 10 years later we are at an annual rate of about 5 percent return for the S&P500, different mixes are showing up.

The ability to be able to select stocks without having to justify it to an investor allows for returns to be earned by those with the patience and discipline to do so with very good dividends in my opinion. With the internet and the ability to look up SEC filings and listen to the management on conference calls live as they get the same answers to questions from the Wall Street "professionals" has made the modern era even more profitable to the individual investor.


Probably the best thing I think Bernstein has written in his 4 books and thousands of words in his blogs, postings and writings is not to listen to anyone else's opinion but your own, of course Bernsteing would prefer you decide this after you pay to hear what he has to say, by ordering some of his writings online at Amazon.com.

[DblDoc]

Quote:

Originally Posted by saluki9 Now all you need to do it tell me where the market is heading. That should be easy!

In 20 years it will be up.

DD

[FinanceDude]

Quote:

The common refrain from the doubters is as Suluki9's who state "show me how you beat it after 20 years" Could someone please show me what Bernstein or Swenson were suggesting 20 years ago? Has anyone followed the same indexing strategy for 20 years? I know that back through 1995-1998 the prevalant suggestion from indexers was that a mixture of bonds and S&P500 would outperform any managed fund due to their international exposure and growth potential. Now 10 years later we are at an annual rate of about 5 percent return for the S&P500, different mixes are showing up.

5% for 10 years is NOT a good investment return, you could have made that in CD's or Treasuries........where's the reward for the risk? Maybe with reinvested dividends,you're up to 5.8%.......still not a good return............

[Running_Man]

Quote:

Originally Posted by FinanceDude 5% for 10 years is NOT a good investment return, you could have made that in CD's or Treasuries........where's the reward for the risk? Maybe with reinvested dividends,you're up to 5.8%.......still not a good return............

My point is that is what indexers were pointing out in 96-97 as a VERY GOOD investment. This is not my return over that period.