Quote:
Originally Posted by bdub
No, not really. The message is that individual investors using portfolio managers will not beat the market on average due to the high fees charged by those active managers to make your decisions. Think mutual fund managers, the smoo's at the bank and the hedge fund guys. Fees matter. He recommends Etf's for individual investors due to the low costs and diversification.
The stock market is a "zero sum game", there are as many winners as losers, it's the costs that make the difference. Trading costs, research costs, etc, etc.
|
Warren Buffet, "Basically any attempts to pick the times to buy or sell, I think, are a mistake for 99% of the population.
And I think that even attempts to pick individual securities is a mistake for people.”
"They don’t need to do anything but (invest in a low-cost S&P 500 index fund). Then they’ll get a decent result over time.
To some extent, the smarter you try to be, the worse you do in investments. Now, there’s a few professional investors that will do better than the S&P over time. But the average individual isn’t going to be able to find them. And they don’t need them. That’s the beauty of it."
Yes, fees are a part of it, but he's not simply talking about mutual funds. I bet if people who are doing individual stock selection did an honest and accurate comparison of their position over a 15 year period had they simply placed their investment money into an index fund and left it, they would be shocked at the results.
95% of mutual funds underperform the S&P 500 Index accounting for fees. The present average fees ranges between .5-1%.
As an individual investor, selecting individual stocks and allocations, again over the
long term that is an incredible accomplishment to beat the markets, and to any who truly do. Congratulations, that's impressive.