Panskeptic

Passive Investing Wisdom from Taylor Larimore

Welcome to Jurassic Park!

"Mr. (John) Bogle has stated that he never met anyone who can time the stock market successfully and consistently."

I'm sorry he's never met George Soros, Paul Tudor Jones, Julian Robertson or any other of several hundred private investors and hedge fund managers who have done just that. Mr. Bogle should get out more.

Even people who say they don't market time, like Warren Buffett, wind up timing their entries and exits anyway.

Mr. Larimore's quasi-religious claptrap is utterly useless. Blind repetition of slogans doesn't make them true, but I suppose if you don't want to worship a tree or a rock, you can worship Mr. Bogle instead. And Mr. Malkiel's orthodoxy has a tough time explaining exactly what happened in the markets this year. "Random" it was not, and hasn't been for a long time.

For a 25 year period not so long ago, the markets had virtually zero return. We're just coming out of what many are calling "A Lost Decade." If you've got 10 or more investing years to waste doing nothing while the market vainly searches for a trend, good for you, but those of us with realistic actuarial estimates aren't limited to passive buy-and-die. "Stay the course" as a piece of advice has a well-deserved reputation of being utterly disastrous.

Do many people overtrade? Sure, without a doubt. Is this particular set of mantras a recipe for success? Hell, no.

P.S. The astronomical turnover in Cubes comes from institutional investors, the ones Jack Bogle has never met, not from individual white-shoe'd retirees in Florida.

Are Subsistence Wages Killing the US?

I have no sympathy with the argument that it's the unions' fault. The unions represent a small sliver of the workforce and it's diminishing all the time. They get no positive press, not even from unionized news sources, and they're a convenient whipping boy for the greed and poor decisions of their employers.

In fact, the real villains of the piece are Reagan and Friedman and Greenspan, who presided over a massive redistribution of wealth upwards. The numbers are irrefutable: a small clique of oligarchs at the top of our pyramid hold ever-increasing wealth subsidized by transfers from below. As long as we narcotize ourselves with economic royalism and false, meaningless slogans like "the magic of the market," we'll be unable to do anything at all for the majority of Americans whose prospects are diminishing day by day.

The Golden Rule is "them's with the gold, makes the rules," and I for one am disgusted with their whining, faulty judgment and irresponsibility.

Buffett's Advice to the Berkshire Faithful: Buy Index Funds

What's the problem here?

Certain gifted money managers have beat the market year after year for decades because they're good at it. By the time they get quoted regularly in the financial press, it's usually too late to buy in. Statistically, your brother in law is not likely to be Buffett/Soros/Rogers/T... Jones/Robertson etc.

Most of us do not have the gift of beating the indexes most years for a 30-50 year period, though some of us read and chart and sweat and swear and pretend to our friends that we have it too. Under those circumstances, it makes perfect sense to buy a clutch of Bogle's dead fish and hope that life doesn't hurt you too bad.

Or if you want to do it the hard way, and it's your money, and there's enough time, and not too many other people are dependent on your results, go for it. There are many roads to Heaven.

Misguided Calls for Activism

This reflexive call against regulatioin is simply an article of the failed Milton Friedman/Ayn Rand orthodoxy. Mark Twain defined faith as "believing what you know ain't so."

The players have already demonstrated calamitously that they can't control their game. Blaming the regulators is pathetic. Obviously an outsider will have to come in and revise the rules. You can't perform an appendectomy on yourself.

The "magic of the market" is self-aggrandizing bushwa, fit only to delude and narcotize its promoters. When the oven fails to clean itself, you've got to turn to someone else. Sensible regulation, different regulation, but not less regulation.

ETFs vs. Mutual Funds: The Long and Short (Term) Of It

Is it just me, or is the case for long term holding of mutual funds not made here? Even if all fees are waved besides expenses, many mutual funds have higher running costs than ETFs.

The only plus I can see with mutual funds is for dollar-cost averaging in small accounts, where many tiny purchases could cause brokerage commissions to add up, but if the article includes that benefit I missed it.

And this quote, "The active management of mutual funds serves to usually provide superior returns that outperform the market averages." is not something we will all agree on.

Perhaps the word "usually" can be replaced with "theoretically."

Defending This Bull Market Once Again

This time it's different?

Remaining Bullish, Despite the Storm Clouds

Thanks for the rousing political pep talk.

However, the reasons for bullishness are not compelling. Citing "American optimism and innovation" is the worst form of empty Babbittry, and as the housing ATM decline accelerates, our consumption levels may not keep us all whole.

And as market valuations are subjective, varying according to methodology, there is absolutely nothing limiting the downside.