Fler citat: Index Fund Advisors, Inc. (IFA.COM)
The investors chief problem, and even his worst enemy, is likely to be himself.
– Benjamin Graham, The intelligent Investor; 1949
The neural activity of someone whose investments are making money is indistinguishable from that of someone who is high on cocaine or morphine.”
– Jason Zweig, Your Money & Your Brain, 2007
The dopamine rush we get from long shots is why we play the lotto, invest in IPOs, keep too much money in too few stocks, and invest with active portfolio managers instead of index funds […] Our brains are wired to force us into forecasting; it is a biological imperative. In fact, humans are born with what I’ve come to call ‘the prediction addiction.’
– Jason Zweig, Your Money & Your Brain, 2007
There is something in people; you might even call it a little bit of a gambling instinct… I tell people investing should be dull. It shouldn’t be exciting. Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.
– Paul Samuelson, Ph.D., Nobel Laureate in Economics, 1970, “The Ultimate Guide to Indexing,” Bloomberg Personal Finance, 1999
When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds.”
–Warren Buffett, February, 2017 Shareholder Letter
The lure of fast money makes you think active, but the record proves you’re better off passive
– The Speculation Blues
Most of the mutual fund investments I have are index funds, approximately 75%.”
– Charles Schwab’s Guide to Financial Independence
Populated by unusually gifted, extremely driven individuals, the institutional funds management industry provides a nearly limitless supply of products, a few of which actually serve fiduciary aims. Identifying the handful of gems in the tons of quarry rock provides intellectually stimulating employment for the managers of endowment portfolios. […] “I erred in describing my target audiences. In fact, I have come to believe that the most important distinction does not separate individuals and institutions… few institutions and even fewer individuals exhibit the ability and commit the resources to produce risk-
adjusted excess returns.
– David Swensen, Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment
No matter what the state of the mutual fund industry, boom or bust: Investment results are more dependent on investor behavior than on fund performance
– Dalbar, QAIB 2018
Over [the past] 35 years, American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback corporate America in a diversified, lower expense way. An index fund they never touched would have done the job. Instead, many investors have had experiences ranging from mediocre to disastrous.
–Warren Buffett, February, 2004, Shareholder Letter
Markets are efficient, but there are different dimensions of risk and those lead to different dimensions of expected returns. That’s what people should be concerned with in their investment decisions and not with whether they can pick stocks.
– Eugene Fama, Ph.D., Nobel Laureate in Economics, 2013 ChicagoBooth Magazine, Fall, 2013
Any pension fund manager who doesn’t have the vast majority and I mean 70% or 80% of his or her portfolio in passive investments is guilty of malfeasance, nonfeasance or some other kind of bad feasance!”
– Merton Miller, Ph.D., Nobel Laureate in Economics, 1990, “Investment Gurus”, Peter Tanous, February 1997
Properly measured, the average actively managed dollar must underperform the average passively managed dollar, net of costs.”
– William F. Sharpe, Ph.D., Nobel Laureate in Economics, 1990, “The Arithmetic of Active Management”, 1991
Professors came to a shocking conclusion, the active advantage was just an illusion.
– The Speculation Blues
Active management is little more than a gigantic con game
– Ron Ross, Ph.D. , The Unbeatable Market, 2002
By day we write about ‘Six Funds to Buy NOW!’… By night we invest in sensible index funds. Unfortunately, pro-index fund stories don’t sell magazines.”
– Anonymous, Fortune Magazine, 1999
If there are 10,000 people looking at the stocks and trying to pick winners, well, one in 10,000 is going to score, by chance alone, a great coup, and that’s all that’s going on. It’s a game, it’s a chance operation, and people think they are doing something purposeful… but they’re really not.”
– Merton Miller, Ph.D., Nobel Laureate in Economics, 1990, PBS Nova Special, “The Trillion Dollar Bet”, 2000
Very little evidence [was found] that any individual [mutual] fund was able to do significantly better than that which we expected from mere random chance
– Michael Jensen, Ph.D., “The Performance of Mutual Funds in the Period 1945-1964”, Journal of Finance, 1968
If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what’s going to happen to the stock market.”
– Benjamin Graham, Interview with Hartman L. Butler, “An Hour with Mr. Graham”, 1976
Statistical research has shown that, to a close approximation, stock prices seem to follow a random walk with no discernible predictable patterns that investors can exploit. Such findings are now taken to be evidence of market efficiency… Only new information will move stock prices…”
– Zvi Bodie, Investments, 2004
Market timing is a wicked idea. Don’t try it ever.”
– Charles D. Ellis, Ph.D., Winning the Loser’s Game, 2002
There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know. Then again, there is a third type of investor… whose livelihood depends upon appearing to know
– William Bernstein, Ph.D., M.D., The Intelligent Asset Allocator, 2000
An investor doesn’t have a prayer of picking a manager that can deliver true alpha. Even over a 20-year period, the past performance of an actively managed fund has a ton of random noise that makes it difficult, if not impossible, to distinguish luck from skill.”
– Eugene Fama, Ph.D., Nobel Laureate in Economics, 2013 65th CFA Institue Annual Conference, 2012
“I have become increasingly convinced that the past records of mutual fund managers are essentially
worthless in predicting future success. The few examples of consistently superior performance occur no more frequently than can be expected by chance
– Professor Burton G. Malkiel, Ph.D.,A Random Walk Down Wall Street, 1973
Wall Street’s favorite scam is pretending that luck is skill.”
– Ron Ross, Ph.D., The Unbeatable Market, 2002
You will almost never find a fund manager who can repeatedly beat the market. It is better to invest in an indexed fund that promises a market return but with significantly lowered fees.”
– John Bogle, The Little Book on Common Sense Investing, 2007
It is difficult to systematically beat the market. But it is not difficult to systematically throw money down a rat hole by generating commissions (and other costs).”
– Michael C. Jensen, Ph.D., Harvard University, Forbes Magazine, 1984
Fund returns are devastated by costs, taxes and inflation.”… “The miracle of compounding returns is overwhelmed by the tyranny of compounding costs
– John Bogle, The Little Book of Common Sense Investing, 2007
For the taxable investor, indexing means never having to say you’re sorry
– William Bernstein, Ph.D., M.D., The Intelligent Asset Allocator, 2002
Odds are you don’t know what the odds are
– Gary Belsky and Thomas Gilovich, Why Smart People Make Big Money Mistakes, 2000
The average long-term experience in investing is never surprising, but the short-term experience is
always surprising. We now know to focus not on rate of return, but on the informed management of risk
– Charles Ellis, Ph.D., Investment Policy, 1985
It takes between 20 and 800 years of monitoring performance to statistically prove that a money manager is skillful rather than lucky which is a lot more than most people have in mind when they say ‘long-term’ track record
– Ted Aronson, “Confessions of a Fund Pro”, Money Magazine, 1999
While much has changed over the years, some things remain the same. There is still a strong relation between risk and expected return… Some things stand the test of time.”
– James L. Davis, Ph.D., “Digging the Panama Canal”, 2004
Those who are ignorant of investment history are bound to repeat it. Historical investment returns and risks of various asset classes should be studied. Investment results, for an asset over a long enough period (greater than 20 years) are a good guide to future returns and risks of that asset.”
– William Bernstein, Ph.D., M.D., The Intelligent Asset Allocator, 2000
Design a portfolio you are not likely to trade… akin to premarital counseling advice; try to build a portfolio that you can live with for a long, long time
– Robert D. Arnott, “Is Your Alpha Big Enough to Cover Your Taxes?”, 1999
Rip Van Winkle would be the ideal stock market investor: Rip could invest in the market before his nap and when he woke up 20 years later, he’d be happy. He would have been asleep through all the ups and downs in between. But few investors resemble Mr. Van Winkle. The more often an investor counts his money or looks at the value of his mutual funds in the newspaper the lower his risk tolerance
– Richard Thaler, Ph.D., Economist, University of Chicago Booth School of Business
We can extrapolate from the study that for the long-term individual investor, who maintains a consistent asset allocation and leans toward index funds, asset allocation determines about 100% of performance
– Roger Ibbotson, Ph.D., Ibbotson Associates, “The True Impact of Asset Allocation on Returns”, 2000
Diversification is your buddy
– Merton Miller, Ph.D., Nobel Laureate in Economics, 1990,
Wheelerwrites.com, May 30, 2012
A good portfolio is more than a long list of good stocks and bonds. It is a balanced whole, providing
the investor with protections and opportunities with respect to a wide range of contingencies
– Harry Markowitz, Ph.D., Nobel Laureate in Economics, 1990, Professor of Economics UCSD, “Portfolio Selection: Efficient Diversification of Investments”, 1959
Investment planning is about structuring exposure to risk factors
– Gene Fama, Jr., “The Error Term”, 2001
A decade ago, I really did believe that the average investor could do it himself. I was wrong. I’ve come to the sad conclusion that only a tiny minority, at most one percent, are capable of pulling it off. Heck, if Helen Young Hayes, Robert Sanborn, Julian Robertson, and the nation’s largest pension funds can’t get it right, what chance does John Q. Investor have
– William Bernstein, Ph.D., M.D., “The Probability of Success”, 2003
Index funds are the only rational alternative for almost all mutual fund investors
– Mark Hulbert, “The Prescient Are Few”, NY Times,July 13, 2008
The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time, because you’ll be buying into a wonderful industry, which in effect is all of American industry… People ought to sit back and relax and keep accumulating over time.”
– Warren Buffett, MarketWatch, May 7, 2007
