I often wonder why so many investors ignore the overwhelming data indicating that capturing market returns in a globally diversified portfolio of low management fee index funds in a suitable asset allocation is likely to outperform stock picking, manager picking and market timing.
Jeff Macke believes investors would have been well served by "stepping aside" and that "buying and holding forever have been tantamount to financial self-abuse." Each of these assumptions is incorrect. The potential damage to investors who follow this wrong-headed advice is substantial.
Most investors would not consider having heart surgery performed by someone without stellar credentials. Yet, they entrust their life savings to "investment professionals" with no formal training in finance.
You don't trust the securities industry. You can't forget it was these "investment gurus" who brought us to the brink of a worldwide depression. If they can't manage their own money, what qualifies them to manage yours?
Don't rely on predictions by anyone about the direction of the markets or what to buy or sell in 2011. No one can predict random events. If your broker couldn't call the worst crash in 50 years, why do you believe his predictive skills have improved?
Mr. Koppenheffer, of the Motley Fool, dismisses proponents of indexing with disdain, calling them non-investors who "...would rather watch a Dharma and Greg rerun, reorganize their closet, or go to the dentist." Not exactly.
In January, 2010, I created the Solin Random Stock Index (SRSI). I wish I could report that my index was a complex algorithm, but it was really very simple. So how did the SRSI do from January, 2010 through November, 2010? It's up an astounding 45.14%.
I get asked a lot of investing questions. I am conflicted in answering them. I want to be helpful but I also want to be tactful. Here are some of the most common questions I am asked and the answers I wish I could give.