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Yep, the opening claiming leaving your money in an index fund amounts to "speculation" seemed bizarrely backwards to me. So trying to pick winners and losers is
by cromwellian 9y ago
Yep, the opening claiming leaving your money in an index fund amounts to "speculation" seemed bizarrely backwards to me. So trying to pick winners and losers isn't speculation, it's investing, but investing in a balanced portfolio spreading risk over the long term is? The latter is only speculating that over the long term, there'll be more winners than losers in your portfolio. The former relies on making individualized bets correctly.
How many portfolio managers beat long term returns to the S&P 500? Not many that I've seen.
- twelve40 9y agoThat's not what they claim though. They claim that significant exposure to US stocks, especially via indexes, right _at this moment_ looks risky since the entire US market is overheated and it requires an active investor to find any reasonable deals, if there are any left. At the same time, they could be both wrong about overheated part, and lobbying to get some active investing fees, sure, but if you do take the viewpoint of the currently overpriced market, then the speculation claim doesn't seem too bizarre.
- notfromhere 9y agoif only active investing by big money managers actually performed better than passive investing
- makomk 9y agoIf the entire US market is overheated because too much capital is chasing too few investment opportunities, which is the likely cause, then trying to cram that money into an even smaller set of investments is obviously not going to help matters. It'll sure help line the pockets of the people running the active investment funds though.