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Index funds aren't just boring, there is something morally abhorrent about simply investing in everything that has done well enough to be in an index fund. At

Index funds aren't just boring, there is something morally abhorrent about simply investing in everything that has done well enough to be in an index fund. At that rate, why not invest in government bonds, given that the government gets whatever share it wants of literally every penny that goes through commerce in any capacity? If you want security, why invest in anything other than the government? I admire people for investing their money actively instead of in an index. It is the closest you can come to the capitalist spirit without actually doing anything. (Not a slight - not everyone needs to "do something" in the sense of starting a business - but being an active investor is very close to the same.) Actively investing takes guts and a kind of entrepreneurial risk-taking.

twblalock 9y ago
I don't admire active investors. Most of them are going to get killed on commissions and fees and won't be able to compete with the professionals who spend all day, every day investing and have sources of information that aren't available to retail investors. It's good that most Robin Hood investors are young and don't have much to lose. I hope they learn their lesson before they put they are old enough to put their retirement investments at risk.
- rak00n 9y ago
  To be honest it's a good sandbox.
zanny 9y ago
> If you want security, why invest in anything other than the government? Because you make more money in index funds with comparable security? Bonds used to be the principal way to save and invest in the past when interest rates were much higher. Its honestly a bit of a shame that as a society loaning money to the government is such a poor investment - it more reflects on the failings of the state if there is literally nothing profitable they can do with money to justify a competitive return. States can do pretty much anything a company can and more, and in a perfect world would be the best managers of capital. Thats where concepts like single payer healthcare come from, after all. And add to that that not everyone wants to be a capitalist. Index funds are specialization of labor - let the teachers teach and the doctors save lives while their money is invested and managed by people who are good at tracking markets. That being said, financial advisory in general is adjacent to such prestigious professions as televangelists and online poker in my mind - the most successful in the business have almost no correlation with actually sane analytical expertise and more to do with who can advertise the best. Fundamentally it is all making educated guesses, and until shit hits the fan people flock to whoever boasts the most rather than whoever is nuanced and rational, at least until after a stock crashes or a market tanks.
- logicallee 9y ago
  I'm sorry it took so many days (11 - this is now on the third page of your userpage so you might not see this) to reply to this: you write extremely counterintuitive and challenging things. (While also supporting your statements with uncontroversial observations that are easy to agree with.) Thanks for taking the time to reply! I'll reflect on what you've written.
dlp211 9y ago
If that's your attitude, you should only buy corporate bonds and IPO's.
- logicallee 9y ago
  Well, maybe not every IPO, but yeah. Good, armchair capitalist strategy.
dguo 9y ago
We do need active investors, but the average person shouldn't be one if his or her goal is long term wealth generation. That doesn't mean maximizing security. It means maximizing the expected risk-adjusted rate of return.
deleted 9y ago
[deleted]
jldugger 9y ago
> Index funds aren't just boring, there is something morally abhorrent Hyperbole much? There's plenty of capitalist spirit in placing your trust in the outcomes of markets. Specialization is a perfectly rational economic decision, and requires you not specialize in other things. There's no reason to believe a medical doctor for example is going to excel at active investing, or that society would be better off if we required it. The wonderful thing about markets is that we can all benefit from the specialization of others. Specialization (and competition) produces cheap pencils, cheap food, and even stocks that are closer to fairly valued. It is a fundamental misallocation of human capital -- I'm better off further pursuing specialization in server administration than trying to stare at stocks and newsfeeds to separate information from noise.

twblalock 9y ago

I don't admire active investors. Most of them are going to get killed on commissions and fees and won't be able to compete with the professionals who spend all day, every day investing and have sources of information that aren't available to retail investors. It's good that most Robin Hood investors are young and don't have much to lose. I hope they learn their lesson before they put they are old enough to put their retirement investments at risk.

rak00n 9y ago
To be honest it's a good sandbox.

zanny 9y ago

> If you want security, why invest in anything other than the government? Because you make more money in index funds with comparable security? Bonds used to be the principal way to save and invest in the past when interest rates were much higher. Its honestly a bit of a shame that as a society loaning money to the government is such a poor investment - it more reflects on the failings of the state if there is literally nothing profitable they can do with money to justify a competitive return. States can do pretty much anything a company can and more, and in a perfect world would be the best managers of capital. Thats where concepts like single payer healthcare come from, after all. And add to that that not everyone wants to be a capitalist. Index funds are specialization of labor - let the teachers teach and the doctors save lives while their money is invested and managed by people who are good at tracking markets. That being said, financial advisory in general is adjacent to such prestigious professions as televangelists and online poker in my mind - the most successful in the business have almost no correlation with actually sane analytical expertise and more to do with who can advertise the best. Fundamentally it is all making educated guesses, and until shit hits the fan people flock to whoever boasts the most rather than whoever is nuanced and rational, at least until after a stock crashes or a market tanks.

logicallee 9y ago
I'm sorry it took so many days (11 - this is now on the third page of your userpage so you might not see this) to reply to this: you write extremely counterintuitive and challenging things. (While also supporting your statements with uncontroversial observations that are easy to agree with.) Thanks for taking the time to reply! I'll reflect on what you've written.

dlp211 9y ago

If that's your attitude, you should only buy corporate bonds and IPO's.

logicallee 9y ago
Well, maybe not every IPO, but yeah. Good, armchair capitalist strategy.

dguo 9y ago

We do need active investors, but the average person shouldn't be one if his or her goal is long term wealth generation. That doesn't mean maximizing security. It means maximizing the expected risk-adjusted rate of return.

deleted 9y ago

[deleted]

jldugger 9y ago

> Index funds aren't just boring, there is something morally abhorrent Hyperbole much? There's plenty of capitalist spirit in placing your trust in the outcomes of markets. Specialization is a perfectly rational economic decision, and requires you not specialize in other things. There's no reason to believe a medical doctor for example is going to excel at active investing, or that society would be better off if we required it. The wonderful thing about markets is that we can all benefit from the specialization of others. Specialization (and competition) produces cheap pencils, cheap food, and even stocks that are closer to fairly valued. It is a fundamental misallocation of human capital -- I'm better off further pursuing specialization in server administration than trying to stare at stocks and newsfeeds to separate information from noise.