Index Funds

  • 06 Dec
    Did John Bogle really criticize his own creation?

    Did John Bogle really criticize his own creation?

    In an article for the Wall Street Journal that was excerpted from his new book, “Stay the Course: The Story of Vanguard and the Index Revolution,” John Bogle, the founder of The Vanguard Group and creator of the first index mutual fund asked an interesting question: “What happens if it (indexing) becomes too successful for its own good?” More →

  • 01 Jun
    Average Joe Investors Are Getting Screwed – Here’s How

    Average Joe Investors Are Getting Screwed – Here’s How

    Recent news came out that Alibaba (NYSE: BABA) just closed a $10 billion financing round for Ant Financial Services Group, operator of China’s biggest online payment platform by market share, Alipay. The deal valued the company at $150 billion and this is an excellent example to show how the little investor gets screwed.

    According to Reuters, investors are Singapore’s sovereign wealth fund GIC Pte Ltd, and state investor Temasek Holdings (Private), as well as U.S. private equity firm Warburg Pincus LLC. So, mostly private and well-positioned firms invest before the IPO. But let’s take a look at what has been going on.



    Yahoo, Alibaba & Ant Financial

    If you have a pension fund, it probably owned shares of Yahoo which consequently owned part Alibaba.  More →

  • 22 May
    Here’s What Graham Might Have To Say About Index Funds Today

    Here’s What Graham Might Have To Say About Index Funds Today

    The main difference between index fund investing today and in Graham’s time are the fees, which in some cases were up to a 9% entry fee back then while now you can buy a market fund with a yearly asset management fee of 0.04%.

    Further, in his time, there weren’t any actual index funds which are the key investment vehicles at the moment, especially if an ETF.



    Graham On Mutual Funds

    Graham believes that the average investor does better by investing in funds rather than investing is stocks directly as funds promote the “good habits of savings and investing.” Those good habits are, unfortunately, not promoted by ETFs as the only purpose of them are to be tradable which is something you don’t want to do when you are a defensive investor and own a fund.  More →

  • 07 May
    What You Can Learn From Berkshire’s Annual Shareholder Meeting

    What You Can Learn From Berkshire’s Annual Shareholder Meeting

    This past Saturday, the Woodstock for capitalists was on as Warren Buffett and Charlie Munger held their annual shareholder conference.

    If you want to succeed in investing and reach your financial goals, this conference and the insights from it are all you need to listen to in order to learn about investing, what’s going on, and what to do about it.

    In today’s article, I’ll summarize what the key points to take out are and also save you the 6-hour watch.



    More →

  • 13 Mar
    This Might Be The Biggest Risk To The Stock Market

    This Might Be The Biggest Risk To The Stock Market

    • ETFs have grown extremely fast in the last 10 years.
    • This amplifies the risks of the stock market because, since when does the majority know what’s best?
    • There is one small example of what happens when things stop growing.



    Introduction

    I’ll close my series on the risks to the stock market by discussing a risk that few see where the prevailing wisdom in one of investing through passively managed mutual funds and ETFs. This is creating a big risk, even if it doesn’t look like that now. Let me elaborate on that. More →

  • 12 Dec
    Invested In Index Funds? Your Future Self Will Thank You For Reading This

    Invested In Index Funds? Your Future Self Will Thank You For Reading This

    • I’ll discuss 5 things everyone who’s thinking about investing or has invested in index funds should know.
    • There’s only one way to properly invest in index funds, but few investors are able to stick to the strategy for a long time.
    • Index investing isn’t the cure-all, and proper portfolio allocation should be always applied.



    Introduction

    The predominant investing strategy right now is to invest in index funds which means that you own an index like the S&P 500, which is a basket of the 500 biggest businesses traded in the U.S.

    Owning part of the 500 biggest businesses in the U.S. isn’t a bad thing, but there are a few things you should know before allocating your hard-earned money to index funds. More →

  • 28 Nov
    Here’s Why You Might Want To Rethink Buy & Hold

    Here’s Why You Might Want To Rethink Buy & Hold

    • A buy and hold investing strategy sounds appealing, you buy something, forget about it for 20 years, and wake up rich.
    • However, it’s highly unlikely that such a thing happens.
    • I’ll discuss the main issues and benefits of a buy and hold strategy.



    Introduction

    Buy and hold is one of the most famous investing strategies, made even more famous by Warren Buffett himself.

    For Buffett, the idea behind buy and hold is that all you have to do is buy a wonderful business at a fair price and hold it forever. However, there are many flavors of the buy and hold strategy, and today, we’ll discuss how the strategy as a whole fits in the current environment. More →

  • 16 Oct
    Doing This Could Increase Your Returns By $2.6 Million

    Doing This Could Increase Your Returns By $2.6 Million

    • It’s somehow accepted that stock returns have been between 8% and 10% in the past. That is correct, but only for a short period in history and it’s not true for all markets.
    • We’ll discuss stock returns over the past 100 years globally which will paint a different picture than what the predominant opinion would have you believe.
    • This doesn’t mean stocks are bad investments, you just have to understand how to go about them. After all, it’s your financial life on the line.



    Introduction

    Currently, most financial advisors will state that the best rational investing pattern is to invest in index funds as it’s impossible to beat the market, and that index funds have been a great investment vehicle over time.

    That would be a correct statement, but the returns that are noted by those who are trying to sell you an index fund are cherry-picked from historical examples. But the truth looks a little different. More →

  • 26 Jun
    Don’t Follow The Herd: Why The Majority Of Investors Always Get It Wrong

    Don’t Follow The Herd: Why The Majority Of Investors Always Get It Wrong

    • Consider this, the question always remains the same: “What will my return on investment be?” But the answer changes all the time.
    • Thinking costs energy and humans prefer to let others do the thinking for them. Are you like that?
    • It’s important to know when to use history as a teacher.

    Introduction

    “Whenever you find yourself on the side of the majority, it is time to pause and reflect.” 

    – Mark Twain

    When Albert Einstein was teaching at Oxford University, he gave his senior physics students exactly the same exam he had given them the year before. His assistant was disturbed by such a mistake, but before intervening he asked Einstein whether he actually made a mistake. Einstein replied that the exam was exactly the same. The assistant was even more concerned and asked why he would do such a thing. Einstein replied, “Well, the questions are still the same, but the answers have changed.” More →

  • 21 Jun
    Diversification vs. Concentration

    Diversification vs. Concentration

    • Index funds and diversification have worked extremely well in the past 35 years, however their success can be thanked to geography, as we hear only about the success in the U.S., and to declining interest rates.
    • If the S&P 500 had the same earnings yield as when the Vanguard fund gained traction, it would be at 557 points, yes 77% below current levels.
    • It’s better to wait in cash than buy a diversified index fund now.

    Introduction

    Some investment gurus advocate spreading your portfolio across various asset classes in order to limit your risks for the same return. On the other hand, others say diversification is for idiots and for those who don’t know what they’re doing. I’ll analyze their arguments and see what the best option is for you. More →

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