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When will people realize there is a gambler in all of us who doesn't want to index? Besides in our celebrity culture we LOVE who we invest with.
Past performance is not a guarantee of future results. With index you get what you get minus fees. It's in the implementation. Index funds also have to buy and sell stocks at the market. When you want to assume market risk, you index. When you want to assume manager risk, you don't.
Would MFO exist if everyone indexed? Frankly this indexing vs passive debate is more irritating then "who killed marilyn monroe?" documentaries all tv channels use as feeder when one of the Kardashian's didn't break a nail and there is nothing else interesting to talk about.
Gambling is not a word I want associated with my retirement portfolio.
"Would MFO exists if everyone indexed?"....I wish someone would have forum posted me senseless years ago about the virtues of indexing. It would have made me a lot more money.
I respect your right to invest as you see fit with your money.
Gambling is not a word I want associated with my retirement portfolio.
"Would MFO exists if everyone indexed?"....I wish someone would have forum posted me senseless years ago about the virtues of indexing. It would have made me a lot more money.
I respect your right to invest as you see fit with your money.
I agree with you. At least since the market bottom in early 2009 I have seen scant evidence MFOers have beaten a buy and hold in the Vanguard S&P 500 fund. Or for that matter come remotely close. Lots of international and emerging market investing and love for cash rich funds as well as alternative funds. The latter out of fears of another 2008.
Edit; Yes, I know it has been a relentless move up the past 8 years and 8 years may not be a long enough period to make any kind of judgement. But I know countless passive investors who are now set for life thanks to those 8 years. And isn't that what it is all about??
In recent times I have become an advocate of a portfolio dominated by a diversified mix of Index holdings. That was not always the case. When I initially ventured into the mutual fund world, I filled my portfolio with actively managed products.
I did not choose those actively managed products randomly. I exercised a rules based selection discipline. Those rules are easily summarized as follows: low fees, low fund turnover rate, a reliable firm, long manager tenure, manage's own money in the fund, a high ratio of stock holdings that diverge from its benchmark, and some recognition of any downside risk factors.
I seldom satisfied all these rules, but a sufficient number to satisfice a majority. I still own a diminishing number of actively managed funds, and I still apply the same sorting criteria.
I certainly agree with the observation that investing should be as far removed from gambling as possible. The historical data shows that as the time horizon expands, the likelihood of positive investment outcomes dramatically improves, especially for equity positions. That's goodness for most MFOers who are in the markets for a longer timeframe.
I'm not overly concerned about investors totally buying into the Index strategy. The odds of that happening anytime soon are remote at best. Today, Indexing has indeed become more popular, but the market percentage is only about 30%. Some active investing is needed to establish a fair market price, but experts believe that a fair price can be determined with only a 20% active participation cohort. We're a long way from that threshold number.
That 20% estimate comes from a video that I referenced a few days ago. The video is over one hour long and presents an argument for Index investing. If you have the time and interest, here is the Link once again:
It includes interviews with industry giants, mostly academics, who strongly endorse a passive, Index portfolio approach. Enjoy! Warren Buffett has been giving the same advice since the mid-1990s. Some of the guys ( EDIT: more properly stated "respected professionals" ) on the video have been doing the same for a much longer period.
Gambling is not a word I want associated with my retirement portfolio.
"Would MFO exists if everyone indexed?"....I wish someone would have forum posted me senseless years ago about the virtues of indexing. It would have made me a lot more money.
I respect your right to invest as you see fit with your money.
I agree with you. At least since the market bottom in early 2009 I have seen scant evidence MFOers have beaten a buy and hold in the Vanguard S&P 500 fund. Or for that matter come remotely close. Lots of international and emerging market investing and love for cash rich funds as well as alternative funds. The latter out of fears of another 2008.
Edit; Yes, I know it has been a relentless move up the past 8 years and 8 years may not be a long enough period to make any kind of judgement. But I know countless passive investors who are now set for life thanks to those 8 years. And isn't that what it is all about??
For the love of. ....!!!!
I agree with the both of you. Just saying keeping talking about it makes no sense. It is not making any difference. A better way to keep people from going active maybe to highlight highly index co-related "star" funds instead so people can see an index fund works as well. Need to change the "psychology" to make a difference.
All newsletters are not publishing buffets comments because they have any interest in getting people to index. M* stock would be not worth 2 cents if everyone started indexing. Every other day someone laments active management and there is an article and then every one has a link to it to get hits. No one listening to you and me.
PS - Please don't say active investing is gambling. Buffet himself is a gambler then.
Gross was a blackjack dealer (and a very good one) in his earlier years. Not so well known, Rukeyser often frequented the tables in Vegas and by accounts really enjoyed it. RIP Lou.
I agree with you. At least since the market bottom in early 2009 I have seen scant evidence MFOers have beaten a buy and hold in the Vanguard S&P 500 fund. Or for that matter come remotely close. Lots of international and emerging market investing and love for cash rich funds as well as alternative funds. The latter out of fears of another 2008.
Edit; Yes, I know it has been a relentless move up the past 8 years and 8 years may not be a long enough period to make any kind of judgement. But I know countless passive investors who are now set for life thanks to those 8 years. And isn't that what it is all about??
I'm not disagreeing with your basic conclusions, but I've never really agreed with using the S&P 500 as a benchmark of an investor's portfolio. While I doubt everyone will agree on what would be a better benchmark, I think that a Balance Composite Index would be a closer measurement. Some people consider cash to be part of the portfolio. That would include a rainy day fund, as well as holding cash as an alternative asset. While I'm sure that there are people who are 98% in equity, I doubt the number of investors who do is very high, unless you own part of the family business.
I can't necessarily disagree with you regarding the benchmark. I guess I am just biased from meeting so many retired multi- millionaires in my various hiking groups. They got that way they say by shoveling every spare penny maxing out their retirement accounts during their working years in S&P index funds. And in some of the younger groups I hike with they seem to be doing the same thing and far ahead of where I ever was in my younger days. Which reminds me of an article I saved from the WSJ 7/7/97 titled Waking Up Rich. It detailed how suddenly many investors are finding themselves millionaires from their employee sponsored retirement accounts by being in funds that mimic the S&P.
"They got that way they say by shoveling every spare penny maxing out their retirement accounts during their working years in S&P index funds."
Unfortunately we were much too early for index funds, but we did the shoveling away into American Funds and American Century predominately large cap and balanced funds. An S&P 500 index fund, had such a thing existed, would have worked even better.
Unfortunately we were much too early for index funds, but we did the shoveling away into American Funds and American Century predominately large cap and balanced funds. An S&P 500 index fund, had such a thing existed, would have worked even better.
The fact is, (well not really a fact, just what I believe), is the mistake most investors make, those investors that semi think they can beat the market by going to cash at just the right moment or stay they in cash because a pull-back just has to happen, they are the ones who's returns over the long run suffer. The investor who keeps switching funds or buying the new or hot fund is the loser. I also believe, to @Junkster's point, this is true of many a MFO investor. Nothing to do with index or managed.
By the way, this is being said by someone who in the past thought he could win the timing game and who could never settle on the perfect mix. Now 1/2 my money is in a robo invested at 60% equity at all times, and the other 1/2 self managed using Old_skeets equity range method. juuuust my 2cents.
One day there will be an article published that says investors are not smart enough to know how much to allocate to S&P 500 index, Russell 2000 Index, Bond Index and International Index. Because they are actively managing the allocations. They should let an all-in-one index fund do that for them, either because historically speaking one will either conclude (a) static 25% allocations yield(ed)(s) better returns or (b) Actively having someone else manage the percentages within yield(ed)(s) better returns.
We want to help people? Ban all active funds. Let everyone compete on expense ratio on their index funds.
Merriman is soon to release a "motif like" all in one fund to replicate his 13 small slice portfolio which allocates among all sectors stocks and bonds domestic and international. His work is based on DFA research. According to him, this portfolio outperformed S&P500 substantially over the last 45 years.
Vanguard's position (which I respect) on Int'l allocation as follows:
Comments
Past performance is not a guarantee of future results. With index you get what you get minus fees. It's in the implementation. Index funds also have to buy and sell stocks at the market. When you want to assume market risk, you index. When you want to assume manager risk, you don't.
Would MFO exist if everyone indexed? Frankly this indexing vs passive debate is more irritating then "who killed marilyn monroe?" documentaries all tv channels use as feeder when one of the Kardashian's didn't break a nail and there is nothing else interesting to talk about.
Let's move on and talk about something else.
"Would MFO exists if everyone indexed?"....I wish someone would have forum posted me senseless years ago about the virtues of indexing. It would have made me a lot more money.
I respect your right to invest as you see fit with your money.
Edit; Yes, I know it has been a relentless move up the past 8 years and 8 years may not be a long enough period to make any kind of judgement. But I know countless passive investors who are now set for life thanks to those 8 years. And isn't that what it is all about??
In recent times I have become an advocate of a portfolio dominated by a diversified mix of Index holdings. That was not always the case. When I initially ventured into the mutual fund world, I filled my portfolio with actively managed products.
I did not choose those actively managed products randomly. I exercised a rules based selection discipline. Those rules are easily summarized as follows: low fees, low fund turnover rate, a reliable firm, long manager tenure, manage's own money in the fund, a high ratio of stock holdings that diverge from its benchmark, and some recognition of any downside risk factors.
I seldom satisfied all these rules, but a sufficient number to satisfice a majority. I still own a diminishing number of actively managed funds, and I still apply the same sorting criteria.
I certainly agree with the observation that investing should be as far removed from gambling as possible. The historical data shows that as the time horizon expands, the likelihood of positive investment outcomes dramatically improves, especially for equity positions. That's goodness for most MFOers who are in the markets for a longer timeframe.
I'm not overly concerned about investors totally buying into the Index strategy. The odds of that happening anytime soon are remote at best. Today, Indexing has indeed become more popular, but the market percentage is only about 30%. Some active investing is needed to establish a fair market price, but experts believe that a fair price can be determined with only a 20% active participation cohort. We're a long way from that threshold number.
That 20% estimate comes from a video that I referenced a few days ago. The video is over one hour long and presents an argument for Index investing. If you have the time and interest, here is the Link once again:
https://www.google.com/search?sclient=tablet-gws&site=&source=hp&q=how+to+win+the+loser+game+sensible+investing&oq=how+to+win+the+loser&gs_l=tablet-gws.1.1.0j0i22i30k1l2.3740.16019.0.23925.20.11.0.9.9.0.411.1982.0j9j1j0j1.11.0....0...1c.1.64.tablet-gws..0.20.2075...0i131k1.hvGA1z_u18U
It includes interviews with industry giants, mostly academics, who strongly endorse a passive, Index portfolio approach. Enjoy! Warren Buffett has been giving the same advice since the mid-1990s. Some of the guys ( EDIT: more properly stated "respected professionals" ) on the video have been doing the same for a much longer period.
Best Wishes
I agree with the both of you. Just saying keeping talking about it makes no sense. It is not making any difference. A better way to keep people from going active maybe to highlight highly index co-related "star" funds instead so people can see an index fund works as well. Need to change the "psychology" to make a difference.
All newsletters are not publishing buffets comments because they have any interest in getting people to index. M* stock would be not worth 2 cents if everyone started indexing. Every other day someone laments active management and there is an article and then every one has a link to it to get hits. No one listening to you and me.
PS - Please don't say active investing is gambling. Buffet himself is a gambler then.
@Maurice: Me too.
Gross was a blackjack dealer (and a very good one) in his earlier years. Not so well known, Rukeyser often frequented the tables in Vegas and by accounts really enjoyed it. RIP Lou.
Unfortunately we were much too early for index funds, but we did the shoveling away into American Funds and American Century predominately large cap and balanced funds. An S&P 500 index fund, had such a thing existed, would have worked even better.
By the way, this is being said by someone who in the past thought he could win the timing game and who could never settle on the perfect mix. Now 1/2 my money is in a robo invested at 60% equity at all times, and the other 1/2 self managed using Old_skeets equity range method. juuuust my 2cents.
We want to help people? Ban all active funds. Let everyone compete on expense ratio on their index funds.
Vanguard's position (which I respect) on Int'l allocation as follows:
https://www.bogleheads.org/wiki/Vanguard_four_fund_portfolio