Experts: Passive Indexing Good For All

The passive approach to investing involves owning low-fee index funds, diversifying over different assets, and re-balancing once a year or so. The Couch Potato portfolios set up by Scott Burns (journalist at Dallas Morning News) in the U.S and by Duncan Hood and Ian McGugan (journalists at MoneySense Magazine) in Canada are some of the better known examples, in their respective countries.

There are plenty of other model portfolios around. Here are more Canadian examples. Here are more U.S. examples. Canadian Capitalist has the Sleepy Mini Portfolio and even yours truly has the One-Minute Portfolio.

One thing I find interesting is how top active investors recommend passive indexing for most investors. You can’t find better endorsements than that.
 
“Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees.” Warren Buffett, CEO of Berkshire Hathaway Inc. (1996 shareholder letter to investors)

“Most investors would be better off in an index fund.” Peter Lynch, former star manager of Magellan Fund (Barron’s interview, April 2, 1990)

“I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities.” Benjamin Graham, father of value investing (1976 Financial Analysts Journal interview).

“Most of my investments are in equity index funds.” William F. Sharpe, 1990 Nobel Laureate in Economics (1998 Business Week interview)

 

Comments

[fxtrader07]

reads like a commercial ad from the etf-industry and contains as much of useful information as one would expect from a commerical ad.
waste of time

[JohnB]

Good quotes from some heavy hitters.

[pat2153]

Has anyone who writes this stuff looked into the fallacious assumptions underlying the math that these "heavy hitters" use. If you do you may change your mind. Also ck out how many of the proponents hung out together in grad school...i.e., Malkiel, Sharpe, Bogel, etc. Do your homework..."all is but opinion"