Re:Insider trading has been rife on Wall Street, academics c...
by mbesto on Sunday February 11, 2018 @02:14PM
(#16354219)
> It's not necessarily a bad idea
True. Even Warren Buffet says it's a great idea. In fact, he tells all of his rich friends to do exactly that - just park your money in index funds.
"Huge institutional investors, viewed as a group, have long underperformed the unsophisticated index-fund investor who simply sits tight for decades. A major reason has been fees: Many institutions pay substantial sums to consultants who, in turn, recommend high-fee managers. And that is a fool's game."
"The 21st century will witness further gains, almost certain to be substantial. The goal of the non-professional should not be to pick winners — neither he nor his 'helpers' can do that — but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal."
> but it's hardly a panacea with perfect incentives.
Huh? The management of the fund is so stupidly simple - just put money in every stock across the S&P 500. How do their incentives change because of that?
True. Even Warren Buffet says it's a great idea. In fact, he tells all of his rich friends to do exactly that - just park your money in index funds.
"Huge institutional investors, viewed as a group, have long underperformed the unsophisticated index-fund investor who simply sits tight for decades. A major reason has been fees: Many institutions pay substantial sums to consultants who, in turn, recommend high-fee managers. And that is a fool's game."
"The 21st century will witness further gains, almost certain to be substantial. The goal of the non-professional should not be to pick winners — neither he nor his 'helpers' can do that — but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal."
http://longbets.org/362/
http://www.berkshirehathaway.com/letters/2016ltr.pdf
> without you being their customer.
> but it's hardly a panacea with perfect incentives.
Huh? The management of the fund is so stupidly simple - just put money in every stock across the S&P 500. How do their incentives change because of that?