Jeff Nabers & Index Investing

[JayNYC]

I'm a bit new to the market and to investing, but have been quite taken by the "unbeatability" of index fund investing. Blogger Jeff Nabers recently posted about downsides to index fund investing, and I don't have the knowledge to critically analyze his points. (It seems more like he is posting about the downsides to equities markets in general.)

Is there someone on these boards who can respond to his claims?

Thanks!

 

[maddythebeagle]

http://www.early-retirement.org/for...unds-active-funds-vs-passive-funds-30819.html

without looking at the blog, here is a list of some older threads on index investing...

 

[haha]

I'm a bit new to the market and to investing, but have been quite taken by the "unbeatability" of index fund investing. Blogger Jeff Nabers recently posted about downsides to index fund investing, and I don't have the knowledge to critically analyze his points. (It seems more like he is posting about the downsides to equities markets in general.)

Is there someone on these boards who can respond to his claims?

Thanks!

This website is just a sales document for his services. Do your homework- the resources in Maddy's link above should help-and stay away from crackpot stuff.

Ha

 

[Marquette]

Well, everything else in the article aside, I tend to be leery about anyone who ends an article with a call to action to contact their company so they can save you from 'x'.

Pick up the Bogleheads Guide to Investing and read through it.

As for his part on inflation... well, without rehashing an entire thread about Shadowstats, the gist of my take on it is that the only inflation number you need to be worried about is your personal rate of inflation and you need to incorporate that and your risk tolerance with regard to investments in your asset allocation.

 

[CitricAcid]

a.) nobody claims that the stock market will return 10% a year
b.) his math example is correct, but only to the naive. He is only explaining the difference between arithmetic and geometric means, when any responsible person only cares about geometric means (always less than or equal to arithmetic means) for returns of the stock market.

Inflation is at 12% too

 

[ats5g]

What a blatant ad.

Ah, yet another person equating index investing with only investing in the S&P 500. I can use index funds for real estate, foreign investments, mortgage bonds, precious metals, debt instruments, and more.

 

[independentthinking9876]

@haha - You don't consider the claims just because the post promotes the author's services?

@Marquette - How does one calculate their own personal inflation? I know that I drive less than I used to because of gasoline price. I eat out less because overall my expenses are going up. The amount of my expenses are going up, but what I get for my spending seems to be going down. I don't even understand inflation.

@Citric - I've had so many financial planners tell me the market always goes up 9% to 10% per year over the long run... it's not even funny how much I hear this. I've also had my old financial planner give me geometric means to analyze my losses against my gains... that I only now realized were useless after reading that blog post.

@ ats5g - Yes I can invest in anything using publicly traded securities, but my money just goes off out of sight and I get a statement telling me what happened with it. I personally have taken the time to learn how to evaluate real estate and I can find properties that will return me 15% year without speculation.

All in all, I think there's a lot to learn from that blog post. If you don't want to buy the products or services of that guy it doesn't mean stop thinking about what he's saying.

 

[kumquat]

I personally have taken the time to learn how to evaluate real estate and I can find properties that will return me 15% year without speculation.

If this is true, why worry about 10% in the stock market. Stick with a sure thing.


Edit to add: Didn't notice that independ..... wasn't the OP

 

[CitricAcid]

@Citric - I've had so many financial planners tell me the market always goes up 9% to 10% per year over the long run... it's not even funny how much I hear this.

You're just listening to the wrong people, as in financial planners. Listen to this board or just facts. Also, you ARE supposed to use geometric means for gains in these types of calculations.

 

[Jessica08]

You should pick up Exchange-Traded Funds for Dummies, it is very informative on ETFs and index funds. It will give you more of an unbiased picture than this article and won't try to sell you anything. Before you invest in index funds make sure you do as much research as possible, do not only rely on web articles.

 

[haha]

@haha - You don't consider the claims just because the post promotes the author's services?

A short but fairly accurate answer to your question is, no, I don't consider claims made in an obvious sales pitch.

Not because there may be no value, though on form that would be quite unusual, but because it would be akin to looking for diamonds in cow pasture. Maybe some are there, but not likely. And the process can be counted on to be unpleasant.

Ha