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  1. #1

    Passive vs Active: Chicken or the Egg?

    Good news story speculating on passive investing as the next crisis:

  2. #2
    Financial intermediaries are always predicting the downfall of passive investing.
    I NEVER wonder why <grin>?

  3. #3
    I cant read the article because of the login, but I'm guessing I am on topic.
    I have some fundamental problems with the philosophical consequences of index investing. Indexes make all companies go up and down in value at the same rate. If there is nothing but index investing, the economic fundamentals of profitability and growth do not affect the stock prices; the market would just be a pyramid scheme controlled by nothing by rate of inflow vs outflow.
    If all the world indexes, one man buying individual stocks gets to dictate prices. Kinda surreal.
    The fact that index investing works as well as it does just depresses me about the inability of man's intellect to determine value and invest with some semblence of reason.

  4. #4
    1. If everybody got smart and stopped gambling....? When is THAT going to happen <grin>?
    2. As passive and CHEAP index investors, we pay 0.11% of assets to Wall St. plus 0.48% to Uncle Sam.
    We enjoy (almost) free-riding the system.

  5. #5
    I'm actually a little surprised that indexing is still so popular. Over the past 15 years, Vanguard's flagship stock index fund returned less than 5% annually, which is less than the return from a Treasury bond.

  6. #6
    SOMETIMES bonds beat stocks over the short term. Over the long term, it ALMOST never happens.
    IIRC, for 135 years, stocks have beaten bonds over every 20 year rolling period except one.
    My philosophy: money needed in the next 0-3 years is in cash. 3-10 years in bonds. greater than 10 years in stocks.


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