well, buy and hold has worked for every relevant historical period in the US stock market. and i don't know of any major managed mutual funds (i am excluding hedge funds) that got hammered less in a crash than unmanaged index funds.
bob2007 said:
How bout the fact that there's bias in relation to the success of the United States of America, what if it was Japan that the average was based on?
then you would have to show me a mutual fund manager who made money as the Nikkei collapsed. or at least didn't lose their shirts as badly. I don't know of any.
Ever heard of Peter Lynch? Very successful mutual fund manager in his day. Read about him and his strategies and you'll know how a lot of mutual fund managers may be posers, but the real experts are definetly out there.
sure. but how do you find them? past returns do not guarantee future results, the average tenure of an active fund manager is pitifully short, and nobody will help me solve the selection bias problem by giving me info that would point out the true turkeys among fund managers (how? by simulating
just how badly poorly performing funds would be doing if they were still around).
You would be a big time amateur if you said this in the investment community.
i'm fine with that. investment professionals can't make very much money off index funds (a few big firms have that locked up) and buy-and-hold strategies. they want to see lots of trading! fat commissions!
if being an amateur means keeping that money, i'll be happy to be shunned by investment "professionals"... the only bad money advice I've ever gotten was from folks who had a commission riding on giving me advice that was in their interest, not mine.
Regarding an index fund, what is the market benchmark and which index would you invest in?
would? am. on the equities side i am invested in the equivalent of the Wiltshire 5000 (i have no interest in advertising for my mutual fund company but will reply in private if pressed). sure there's a selection bias there, i will admit. and there is great volatility in stocks, which is why i asked the OP about his goals. 5 years would be a minimum time horizon for using money invested in any equities.
i put my very small amount of money where my mouth is--and the two are clearly out of proportion to one another
doesn't mean that it's unbeatable because others do.
i agree that some do beat it--but why would they share those gains with me? and how am I supposed to stay away from the 80% of funds that don't (after expenses)? that is, how do I find the next peter lynch -- and why wouldn't he leverage himself & his friends to the max possible to eat up all that "beta" himself? just give me reliable alpha... if the US stock market tanks in the long term, I'm screwed in so many ways that my equity porfolio is the least of my worries! and I don't think even peter lynch could save my arse from that fire.
Just some things to think about. I am against index funds and conventional wisdom of buy and hold strategies. No, I don't think many mutual fund Nobody said investing was easy. But I'm sure theres fund managers that can do it well and beat an index, at least they can cut losses and sell stock.
If they actually knew when to cut losses...but history shows they don't. Look, clearly you have your Kool-Aid and I have mine. The investment community pretty much drinks all the same Kool-Aid, and most of them are doing quite nicely for themselves, quite nicely indeed, including many of my college classmates. I strongly suspect they do so at the expense of their clients.....
IF hedge funds were actually hedging, then they'd be useful diversification and i'd be all over them. but there's too much liquidity chasing too few great strategies, and all the moolah I might get my hands on has long since been arbitraged away.