> Another is that picking stocks is a time-consuming process Just buy them all. Or pick them randomly. Let me remind you that this thread started with an article about the guy who wrote about the blindfolded monkeys.
It would cost $2500 in fees for me to buy a single share of every stock in the S&P500. Compared with $0 + some negligible MER to buy an ETF with the same money.
If you want to buy every stock in the S&P500, any reason not to use Robin Hood with their $0 transaction fee?
Me, I don't even believe in funds. If managers are not better than blindfolded monkeys, why should we even pay them? Just buy diversified stocks, and never sell unless you need cash. https://en.wikipedia.org/wiki/Buy_and_hold
The VTI, for example, has an expense ratio of 0.05%. You'd need $1.2M invested to pay Vanguard $50/month (which is my Internet bill).
Probably there are other optimizations with a better time-money tradeoff than manually managing your portfolio.
I'm a big believer in index funds and have been putting my money into them for a long time. But... you have to wonder where this is all ending up as more and more people move to passive index funds. The power of the market is based on millions of individual opinions on the price of a company's stock. On average, over time, these collective opinions will be correct. But say in the extreme case, it got to the point whe…
Warren Buffett says it's OK, and has an excellent explanation for this. If I recall correctly: imagine you take all the investors in the US economy and put them in a room. Divide the room in halves. One side contains all the active investors, the other side contains all the passive investors. If each side owns roughly half of the economy, their returns will be equal. In that case, it's better to sit on the side with…
Buffett is close to winning a $1 million, 10-year bet he made with the head of the hedge fund Protege Partners.
The bet was simple. Buffett would invest in a Vanguard S&P 500 index fund, and the hedge fund could do anything they wanted.
I'm a big believer in index funds and have been putting my money into them for a long time. But... you have to wonder where this is all ending up as more and more people move to passive index funds. The power of the market is based on millions of individual opinions on the price of a company's stock. On average, over time, these collective opinions will be correct. But say in the extreme case, it got to the point whe…
True but some of my active funds correctly saw the problems with the UK banks and got out before the big losses an index fun would have had to buy those banks and taken the loss.
The saying is "a broken clock is right twice a day." Correctly reading and responding to market conditions is not sufficient. You have to do it continually.
which a lot of my Investment trusts have done for several decades
I'm a big believer in index funds and have been putting my money into them for a long time. But... you have to wonder where this is all ending up as more and more people move to passive index funds. The power of the market is based on millions of individual opinions on the price of a company's stock. On average, over time, these collective opinions will be correct. But say in the extreme case, it got to the point whe…
Ned Johnson had it right way back when. Why would anybody want average returns when they could pay him big money for below-average returns and the occasional black-monday disaster? Seriously, index fund investing assumes an optimistic outlook. It assumes the managers of companies will do an OK job in the long term and the companies will grow. Index funds allow investors to participate in that growth without having a…
Any good reading on how to determine your allocation strategy? I read up on Bogleheads but there isn't always much on the "why" that is backed by data.
I'm a big believer in index funds and have been putting my money into them for a long time. But... you have to wonder where this is all ending up as more and more people move to passive index funds. The power of the market is based on millions of individual opinions on the price of a company's stock. On average, over time, these collective opinions will be correct. But say in the extreme case, it got to the point whe…
They are creating managed funds that make money, you can't access them. The problem with index funds is that a lot of the active capital is moving to closed markets.
So when the bogleheads endlessly debate the perfect portfolio mix, they miss the point that they have zero exposure to private equity and other markets.
Index funds are better than managed funds, and are mostly better than individual equities. That doesn't mean that 100% of your money should be in them.
I recommend Weathfront and Betterment to all my less mathematically inclined friends. However, if you spend only a few hours getting acquainted with asset allocation and rebalancing principles, you can do pretty everything that these services do without their fees.
And what do you recommend for your mathematically inclined friends? Any books you recommend for asset allocation and rebalancing principles?
I recommend Weathfront and Betterment to all my less mathematically inclined friends. However, if you spend only a few hours getting acquainted with asset allocation and rebalancing principles, you can do pretty everything that these services do without their fees.
With enough money invested I find Betterments fees very reasonable. Especially when you consider features such as tax loss harvesting. Is that something that requires little to no time if you actively manage your index funds? Maybe there are tools which aid you with that?
Really the only thing you have to do is rebalance. I do it every half year, but some people even do it every two years. And it takes all of, maybe, 20 minutes. Of course, you need to grasp the principles, which takes reading a book or two, so that's, say, 10 more hours. With compounding over the next forty of fifty years, saving those 25 basis points or whatever it is that betterment charges over Vanguard's fees is not insignificant. It's not a ton, but totally worth an hour a year to me.