# Can the Bright Bulbs Beat the Index



## Belguy (May 24, 2010)

Here is an article which I found interesting:

http://www.theglobeandmail.com/glob...cks/article1953749/singlepage/#articlecontent

What I take away from this example is that the bright bulbs at Morgan Stanley, with all of their education, experience, resources and banks of computers didn't manage to do significantly better than if they had just picked the index.

And so, how can you expect to do with your education, experience, resources, and single computer or would you too be better off to just invest in the respective indexes?

What says you?


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## Jungle (Feb 17, 2010)

I also believe that over the long term, most investors do not beat the index with their stock portfolios. 

So much easier to index invest, less time, stress, etc.


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## Guest (Mar 24, 2011)

Belguy said:


> And so, how can you expect to do with your education, experience, resources, and single computer or would you too be better off to just invest in the respective indexes? What says you?


 I says why do I have to beat the index ... it's kinda like the old joke ... 2 guys are being chased by a bear, one guy stops to put on his sneakers ... the other guy says what are you doing ... the first guy says well, I don't have to outrun the bear ... I just have to outrun you.

I suppose if investments were a persons sole income, indexes would be the way to go ... how dreary is that.


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## Lephturn (Aug 31, 2009)

So... you think Morgan Stanley's goal is to pick a good investment portfolio? I don't think so.

Want a real laugh, look at Goldman's picks.http://www.istockanalyst.com/article/viewarticle/articleid/4782181

These guys are selling stocks to their own customers as they trade against the retail order flow. They do what makes the investment bank the most money - that has little to do with choosing good investments.

Never forget these big firms make billions trading against the order flow of the long term buy-and-hold investor.


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## andrewf (Mar 1, 2010)

rikk said:


> I says why do I have to beat the index ... it's kinda like the old joke ... 2 guys are being chased by a bear, one guy stops to put on his sneakers ... the other guy says what are you doing ... the first guy says well, I don't have to outrun the bear ... I just have to outrun you.
> 
> I suppose if investments were a persons sole income, indexes would be the way to go ... how dreary is that.


So, investing as entertainment?


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## the-royal-mail (Dec 11, 2009)

Are you suggesting you can beat the index, andrewf?


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## HaroldCrump (Jun 10, 2009)

_Someone_ has to believe it's possible to beat the "index".
If no one believes that, there won't be a market.
If everyone were to _buy, hold and prosper_ forever, the stock market would shut down


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## andrewf (Mar 1, 2010)

the-royal-mail said:


> Are you suggesting you can beat the index, andrewf?


I have no idea how you drew that conclusion. I was expressing my skepticism that we should invest for entertainment, and index funds are boring.


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## Belguy (May 24, 2010)

Those who feel that index investing is boring might want to reread 'The Tortoise and the Hare' for the universal message contained therein.


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## Guest (Mar 24, 2011)

andrewf said:


> So, investing as entertainment?


I dunno anything about investing ... this morning I purchased 1000 shares of OCZ:NASDAQ at $7.70 ... now the news may already be built in to the price, but in April OCZ will announce a 100% increase over last years 4th quarter. I am looking for a feeding frenzy of at least $1, maybe higher on that news ... and I'll sell by the end of that day. Often there's a 2nd pop the 2nd day so I may stay in for that day ... tbd. Or I could lose ... also tbd.


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## fatcat (Nov 11, 2009)

> Someone has to believe it's possible to beat the "index".
> If no one believes that, there won't be a market.
> If everyone were to buy, hold and prosper forever, the stock market would shut down


 i'm with harold on this

there are a hell of a lot of people trying to hype the idea that you CAN beat the market and they make a hell of lot of money from that proposition, like: brokers, brokerages, day trading software makers, newsletter writers, investment seminar leaders, web site builders, newspaper, magazines etc etc etc etc etc etc etc etc etc

if there was enough conclusive proof and if the public actually really bought the idea, then a lot of people would be looking for work

beating the market is no different than picking winners at the track


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## the-royal-mail (Dec 11, 2009)

I think andrewf is confused.

Not only that, but if all of us buy low-fee index funds, the fund managers would be out of a job. And no one would buy cheap stocks.

Plus it's fun to _sometimes_ chase performance.


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## andrewf (Mar 1, 2010)

Undoubtedly you need people to speculate in order to make the market. I don't think we're in any danger of having everyone wanting to hold index funds.


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## brad (May 22, 2009)

I'm going to sound like a broken record because it's a pet peeve of mine, but I think the confusion here largely centers on time horizon.

Over the long term, yes, the index generally comes out ahead. But that's because it comes out ahead *on average*. An average hides a lot of ups and downs. Consider that the Earth's average temperature is 13.8 Celsius and then think about all the places on the planet that are much, much warmer, and all those that are colder.

Over the short term, you can most certainly beat the index and thousands if not millions of people do it every day. It's just that, over time, their losses tend to counterbalance their gains and the index usually comes out ahead.


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## the-royal-mail (Dec 11, 2009)

Well said, brad!


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## Guest (Mar 24, 2011)

the-royal-mail said:


> Plus it's fun to _sometimes_ chase performance.


OT to some extent: Exactly ... and no matter how hard I try to hold on to a stock ... be an investor ... I just can't tolerate being invested in these markets ... example ... 14 March purchased 1600 shares of RCI.B at $33.75, collected the dividend of $.355, sold today at $34.72 ... that's ~$2k I'm more comfortable having in my pocket than in todays market.


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## fatcat (Nov 11, 2009)

> I'm going to sound like a broken record because it's a pet peeve of mine, but I think the confusion here largely centers on time horizon.
> 
> Over the long term, yes, the index generally comes out ahead. But that's because it comes out ahead on average. An average hides a lot of ups and downs. Consider that the Earth's average temperature is 13.8 Celsius and then think about all the places on the planet that are much, much warmer, and all those that are colder.
> 
> Over the short term, you can most certainly beat the index and thousands if not millions of people do it every day. It's just that, over time, their losses tend to counterbalance their gains and the index usually comes out ahead.


 your theory works out well for people that die young ....

what you say has no real meaning at all .... why would anyone want to prosper over the short term ?

a plan that is focused on prospering over the short term necessarily ignores the long term

and most us want to live long and not die broke


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## brad (May 22, 2009)

fatcat said:


> a plan that is focused on prospering over the short term necessarily ignores the long term


No, some people just want to make money now; there are people who live off their investments and have no other source of income. They want to maximize their gains today; they're not investing for the long term.

All I'm saying is that, over the long term, the performance of individual stock and fund-pickers tends to underperform the index over that same period of time. But in the short term, you can certainly beat the index. It's just that your probability of beating the index decreases with time because your losses will counterbalance your gains, depending on how diversified you are etc.


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## the-royal-mail (Dec 11, 2009)

rikk said:


> OT to some extent: Exactly ... and no matter how hard I try to hold on to a stock ... be an investor ... I just can't tolerate being invested in these markets ... example ... 14 March purchased 1600 shares of RCI.B at $33.75, collected the dividend of $.355, sold today at $34.72 ... that's ~$2k I'm more comfortable having in my pocket than in todays market.


I know exactly how you feel. My problem is that I have a hard time cashing out when realizing that type of performance. I become addicted to it and want it to keep growing. If I cash in as you say, then the money stops growing. And then if it goes down, well of course I have to stay in and wait for it to recover.

Doing as you describe was one of the reasons I wanted to play around with a brokerage account, just to become comfortable with that process. I think there's all sorts of short term gains to be found out there if you want to get into more frequent trading, watching the markets etc. But for now I'm back in my index funds and gold and will continue to enjoy their returns.


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## fatcat (Nov 11, 2009)

> All I'm saying is that, over the long term, the performance of individual stock and fund-pickers tends to underperform the index over that same period of time. But in the short term, you can certainly beat the index. It's just that your probability of beating the index decreases with time because your losses will counterbalance your gains, depending on how diversified you are etc.


 brilliantly put, i totally agree ...



> No, some people just want to make money now; there are people who live off their investments and have no other source of income. They want to maximize their gains today; they're not investing for the long term.


 brad, the problem with this statement is that even old people who would be the only group i can think of that would be focusing on the NOW (and not caring about the long term) don't want to outlive their money ..

sure there are people (mostly older, like me, increasingly ) who want to maximize income versus capital appreciation but they still need to have some strategy in place to not outlive their money

so, while we can say that, yes, some people do beat the market over the short term, it has no real meaning because, in the end, it's the long term that matters ..

anyway, i may be argumentative here, but i do get your point and i agree with you ...


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## brad (May 22, 2009)

fatcat said:


> so, while we can say that, yes, some people do beat the market over the short term, it has no real meaning because, in the end, it's the long term that matters ...


As you said I don't think we disagree on this, but I do think the issue of time horizon needs to be stated overtly when talking about investing and/or speculating. I see a lot of people talking past each other on this forum because they have different assumptions about each other's time horizons: some people are in the market to make money now (whether it's to make enough to live on or to "get rich quick" and make a killing), whereas others are investing for a distant goal like retirement. 

The strategies, approaches, and goals for short- vs. long-term investing are pretty different. That's why I think most questions about investment strategies need to start by clarifying the investor's intended time horizon.


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## the-royal-mail (Dec 11, 2009)

You're making a lot of very true and excellent statements in this thread, brad. I agree with all. Time horizons are never the same for any two people. And even 1 person may have different time horizons in mind for certain accounts of his vs. others. That's the case for my TFSAs and RRSPs. Both are quite different in terms of their investment goals and time horizons. I vote YES to the idea of clarifying your time horizon when discussing or asking about these matters.


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## danny_yaya (Mar 21, 2011)

i think this makes an excellent point...there's no doubt that we should all be considering the long-term, but that doesn't have to mean you're not supposed to make money now too. being aggressive with stocks and timing the market to cash in today can go a long way if you're putting some of those gains toward long-term goals like retirement. i'm really just getting started in all this, but this is how i feel i'm going to balance my desire to make money today with my need for future financial security...my 2 cents


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## fatcat (Nov 11, 2009)

> being aggressive with stocks and timing the market to cash in today can go a long way if you're putting some of those gains toward long-term goals like retirement


 i'll take one more shot and then shut up ... the idea that you can somehow be "aggressive with stocks and time the market" and also put money aside for the future seems to me be a classic case of the "animal spirits" that affect investing ..

being aggressive and timing the market may bring greater rewards and it also may lose your entire portfolio so may have nothing to put aside for the long term, you may have no gains to put aside for the long term

you can't have it both ways, you can't be conservative and build a portfolio and be aggressive and time the market at the same time

it goes against the basic law of investing, which says that greater reward always implies greater risk and conversly less risk (think buying GIC's) involves less reward ...

so when you tell yourself that your being aggressive for the purpose of putting money aside for the long term .. you are essentailly pulling the wool over your own eyes


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## Mockingbird (Apr 29, 2009)

Belguy said:


> Here is an article which I found interesting:
> 
> http://www.theglobeandmail.com/glob...cks/article1953749/singlepage/#articlecontent
> 
> ...


A bit missleading since the list is never designed as a portfolio. Need to understand the premise behind these picks. It states that "each investment idea is chosen based on its own merit and without any consideration of the other investment ideas chosen." You will get more info if you actually read the prospectus.



Lephturn said:


> So... you think Morgan Stanley's goal is to pick a good investment portfolio? I don't think so.
> 
> Want a real laugh, look at Goldman's picks.http://www.istockanalyst.com/article/viewarticle/articleid/4782181
> 
> ...


You get the idea. There are other reasons for the picks. Morgan Stanley is also the underwriter, institutional holder, and/or a major market maker for all the stocks in that list. Interesting note regarding two new additions to the group, CBS and GOOG. While recommending this time around, MS unloaded -16.85% and -7.93% respectively last quarter.


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## Belguy (May 24, 2010)

If you don't learn from history, you are doomed to repeat it.

When I read some of the posts in this forum, I can't help thinking that these would be the same type of investors who would have been heavily invested in such names as Enron and Nortel just as they were peaking and about to crash. Or, they would have been chasing many of the high-flying tech names just before the dotcom bubble burst and destroyed the portfolios of so many investors. Or, they might have been 100 percent in equities just as the crash of 2008 occurred and then cashed out in fear as the markets went down for months on end instead of holding on and waiting for the rebound.

I have been in this investing game for many, many years now and I have seen it all. As a mature investor, I have to shake my head when reading some of the comments from the young whipper-snappers on this forum and I think to myself that they will learn the hard way sooner or later just as generations before them have.

Indeed, we grow too soon olde and too late schmart!!!

Have a diversified, balanced portfolio of mainly index investments and stop swinging for the home runs.


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## Jungle (Feb 17, 2010)

Sometimes you have to live and learn.


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## kcowan (Jul 1, 2010)

the-royal-mail said:


> If I cash in as you say, then the money stops growing. And then if it goes down, well of course I have to stay in and wait for it to recover...


IMHO the secret is to always maintain a list of stocks you want to buy when you have the money AND have a good rule for when you do profit-taking. What most people do to achieve average returns is hang onto their losers in hopes of recouping losses (even paper losses). This is a fool's game.

Most people don't study markets and don't have a strategy for investing. We don't see these people on CMF but I do meet them every day. For them, low-cost index investing might be the best strategy.


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## kcowan (Jul 1, 2010)

Belguy said:


> What says you?





Mockingbird said:


> A bit missleading since the list is never designed as a portfolio. Need to understand the premise behind these picks. It states that "each investment idea is chosen based on its own merit and without any consideration of the other investment ideas chosen." You will get more info if you actually read the prospectus.
> ...
> You get the idea. There are other reasons for the picks. Morgan Stanley is also the underwriter, institutional holder, and/or a major market maker for all the stocks in that list. Interesting note regarding two new additions to the group, CBS and GOOG. While recommending this time around, MS unloaded -16.85% and -7.93% respectively last quarter.





Belguy said:


> If you don't learn from history, you are doomed to repeat it.
> 
> When I read some of the posts in this forum, I can't help thinking that these would be the same type of investors who would have been heavily invested in such names as Enron and Nortel just as they were peaking and about to crash. Or, they would have been chasing many of the high-flying tech names just before the dotcom bubble burst and destroyed the portfolios of so many investors. Or, they might have been 100 percent in equities just as the crash of 2008 occurred and then cashed out in fear as the markets went down for months on end instead of holding on and waiting for the rebound....
> 
> Period. Case closed.


I think you are doing a disservice to the other participants in this forum. You mind is made up. But please stop trying to convince everyone else that your way is the only way. It isn't!


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## humble_pie (Jun 7, 2009)

this is a sad & pitiful thread. Several here, by their own admission, have never owned a single stock in the whole of their lives.

yet they are convinced that those who buy stocks must, inevitably, lose.

there are no studies that prove, definitively, that bespoke portfolios always underperform indexes over the long run.

what about the 50% that will outperform the index.

somewhere in this thread there is a silly statement to the effect that people who live on investment income are short-term speculative day traders. The poster is a self-confessed novice investor.

the truth is the exact opposite. Parties who can earn a living by professionally managing their own portfolios are, by definition, high net-worth individuals. Any private investment counsel - and all their clients are high net-worth - will affirm that their clients tend to be conservative, long-term haulers almost to a fault.

this forum has enjoyed the happy circumstance, for a year or two, of being able to attract advice & commentaries from a number of successful investors, including some obvious multi-millionnaires. Invariably, these commentaries & suggestions are offered for free. The authors do not appear to be selling anything. Many of their comments, if one were to buy them in professional time, are worth several hundred $$$ per hour.

in this manner, cmf forum has been a priceless resource, if the reader understands where to look & whom to respect.

there has also always been a presence here of ugly, jealous, spiteful losers who cling to boasting about their index funds & who defile those whose performance outstrips indexes. For the most part the ugly, the jealous & the spiteful have been novice or very small investors. There are exceptions to this.

of late the din & nuisance from the ugly, the jealous & the spiteful has grown noticeably louder. The priceless nuggets are being lost in a tsunami of ignorant howls from yobs.

for example, elsewhere in the forum recently are a pair of lighthearted comments from 2 highly skilled investors, in which they explain their long-term investment philosophy. These are priceless nuggets. For fun, the 2 posters refer to owning stocks as owning a harem, which they care for loyally & diligently. Yet their approach is an excellent model that is universally utilized, in one form or another, by nearly all the successful investors in this forum.

the approach goes like this: 1) buy hi-quality common stock, employing a dividend growth strategy if this appeals to you, or some other well-known disciplined criteria; and 2) enhance total return either by a judicious level of swing trading aka market timing, or by a rigorous use of derivatives trading.

despite what the tsunami of novice investors would claim, the above are reasonable skills that every serious investor can learn. Parties starting out while still young will also benefit from practical experience along the way.

what the 2 harem posters have written up is an appealing version of the universal recipe for investment success. It works. Thanks to this forum, it's free. But did any of the frightened novices even notice these posts ? or were the yobs all too busy posting insults about how the stock-picking-investor-is-going-to-lose-yada-yada.

lastly, i wish to say that i for one find belguy to be offensive. Not only do his messages consist almost entirely of platitudes brazenly stolen from other well-known writers, but they are endlessly studded with insults, jeers, gibes & sneers, and this, to an unspeakable degree.


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## zylon (Oct 27, 2010)

*someone needed to say it*



kcowan said:


> I think you are doing a disservice to the other participants in this forum. You mind is made up. But please stop trying to convince everyone else that your way is the only way. It isn't!


+1


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## fatcat (Nov 11, 2009)

both jim rogers and warren buffett have long recommended index investing for the average investor and yes, both are bright bulbs that have beaten the index ... hopefully that will piss everyone off 

_Choose a few stocks that are likely to produce above-average returns over the long haul, concentrate the bulk of your investments in those stocks, and have the fortitude to hold steady during any short-term market gyrations._
An excerpt from The Warren Buffett Way, Second Edition by Robert G. Hagstrom.

When a shareholder asked for the single best specific investment idea Buffett could recommend to an individual in his 30s, Buffett said: _"I would just have it all in a very low-cost index fund from a reputable firm, maybe Vanguard. Unless I bought during a strong bull market, I would feel confident that I would outperform ... and I could just go back and get on with my work."_ 

"Index investing outperforms active management year after year." - from Jim Rogers blog


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## humble_pie (Jun 7, 2009)

not that the opinion of a lowly pie crust would matter, but ...

i've always believed that jim rogers is buttressed as heavily as a medieval gothic stone cathedral by an awesomely expensive phalanx of high-powered PR agents. Take away the hype & there's not much there. I for one would rather listen to boone pickens.

and lately i've begun to wonder if buffett himself is beginning to lose his grip.

see those 2 buffett remarks quoted here ? they contradict each other.

the first remark is vintage buffett. It's the paramount stock-picker in his highly-focused element that we always knew.

the 2nd remark is very recent. It shows imho that something is beginning to slip. Buffett knows he has to answer the question; he struggles to find something for which he won't be blamed if wrong; and out comes the pablum answer, indexation.


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## buaya (Jan 7, 2011)

All I can say is that in anything that one does - business, real estate etc, time is always the equalizer. Over 30 years, you always make money.
In the 60's, 70's and even the 80's, companies have a stranglehold on their market - think Bell, Rogers etc. Now, with anti trust regulations, it is not possible anymore. 
Competition is the name of the game and IMHO, 10 years is the life span of a successful company before they are just treading water unless they come up with the next big thing. 
Questions. Would anyone buy Wal-Mart today to hold for the next 20 years and expect a 5-10% return annually.


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## HaroldCrump (Jun 10, 2009)

humble_pie said:


> and lately i've begun to wonder if buffett himself is beginning to lose his grip.
> 
> see those 2 buffett remarks quoted here ? they contradict each other.
> 
> ...


Anyone interested on this topic must read _Even Buffet Isn't Perfect_ by _Vahan Janjigian_.
It is a very interesting book and addresses some of Buffet's contradiction, including this concentrated investing vs. indexing issue.
It is not a critical or damning book, but very interesting.


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## Mockingbird (Apr 29, 2009)

kcowan said:


> I think you are doing a disservice to the other participants in this forum. You mind is made up. But please stop trying to convince everyone else that your way is the only way. It isn't!


???

If I sounded like I was dis-servicing others, then my apologies. I was just correcting Belguy's misinformation.

MB


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## humble_pie (Jun 7, 2009)

mockingbird, it was certainly not yourself. It was someone else.

you were, in fact, a breath of fresh air here in this thread.
thanx for your post yesterday. Very welcome insights.


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## Belguy (May 24, 2010)

Let's get this one point clear. I perfectly understand that index investing is not the only way to invest but I believe strongly that it is the BEST way for the small investor to invest for the long term.

Ref: 'THE Investment Answer' by Daniel C. Goldie and Gordon S. Murray

Before posting degrading personal messages aimed at forum participants, please refer to the forum rules.

Also, if you don't like my postings, please do not read them.


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## zylon (Oct 27, 2010)

you forgot "nuff said"

... that, apparently has great meaning to some folks


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## Belguy (May 24, 2010)

That is not to say that I can't learn a lesson from the criticism. I realize that I have become like a broken record when it comes to the merits of index investing and that this has probably become tiresome to many long time members of this forum. That is why I have tried to direct many of my recommendations to new forum members who have come to the site looking for investment ideas. However, in the process, I have obviously ticked off some of the more senior members.

Anyway, spring is here and I will have many new jobs to do and so will have much less time than I had in the winter to contribute to this forum which should suit some on here very much.

In the meantime, please remember to buy index funds, hold them, rebalance your portfolio periodically, and prosper.


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## Argonaut (Dec 7, 2010)

humble_pie said:


> this is a sad & pitiful thread.


This is a very solid post, humble!

I think part of the problem with index investors, or maybe just Belguy, sounding a bit repetitive is that there is not much to discuss. You can choose your asset allocation and what company you give your money to, but that's about it.

I, for one, like coming here to discuss portfolio building by way of making your own individual choices. Everybody has their own ideas and strategy so it's nice to pick up some things. I'm a bit of a hybrid investor between dividend stocks and precious metals, and it's worked for me better than the indexes would have. I'm certainly not high net-worth, being a "whippersnapper" and all, but we're all comparable using percentages! This doesn't mean I'm going all in on the next Nortel.


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## kcowan (Jul 1, 2010)

Mockingbird said:


> ???
> 
> If I sounded like I was dis-servicing others, then my apologies. I was just correcting Belguy's misinformation.
> 
> MB


Sorry if I left that impression. I was using your post for exactly that reason: to correct the misinformation originally posted. Thank you for your excellent contribution!


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## kcowan (Jul 1, 2010)

Since the purpose of this forum is to educate people interested in money matters, ignoring the content that you believe is not always right is doing other posters a disservice.

And Buffett always prefaced his remarks about index investing with weasel words like
- for the average investor
- for people that lack the skills needed for stock-picking
- for people that can't be bothered doing due diligence
- etc.

So give him a break and stop misquoting him. He is the ultimate value investor.

"Get rid of your losers as soon as possible. Index investors can't do that. Stick to your winners only as long as the initial reasons for selecting them still hold. Only rebalance when there is a good reason to do it." - kcowan, 2002


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## humble_pie (Jun 7, 2009)

_" Get rid of your losers as soon as possible. Index investors can't do that."_

this is interesting because, while it is definitely wise & smart & apparently vintage kcowan 2002, it's also an idea that argonaut posted only a few months ago.

what's interesting about argonaut is that his stock picks & his reasons for his choices are always wondrously cogent & well thought-out. One would expect a poster with a couple of decades of experience. Yet argo is only 24.


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## Toronto.gal (Jan 8, 2010)

humble_pie said:


> this forum has enjoyed the happy circumstance, for a year or two, of being able to attract advice & commentaries from a number of successful investors, including some obvious multi-millionnaires. Invariably, these commentaries & suggestions are offered for free. The authors do not appear to be selling anything. Many of their comments, if one were to buy them in professional time, are worth several hundred $$$ per hour.
> 
> in this manner, cmf forum has been a priceless resource, *if the reader understands where to look & whom to respect.*


I agree wholeheartedly & I'm very thankful to all those that have shared their knowledge & made me a better/more confident investor.

Excellent post!


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## Lephturn (Aug 31, 2009)

humble_pie said:


> this is a sad & pitiful thread. Several here, by their own admission, have never owned a single stock in the whole of their lives.
> 
> yet they are convinced that those who buy stocks must, inevitably, lose.


Excellent post humble_pie.

It's hard not to feel jumped-on sometimes when posting anything contrary to the "buy and hope" indexing mantra. And look out if you should stray into technical analysis! Here's to a bit more diversity in opinions being welcomed here.


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## humble_pie (Jun 7, 2009)

bonjour leph

the way i see it, half the cohort in the race is going to wind up better than the index.

and every day is a new marathon.

w favourable odds like that, why not start training.

btw speaking of priceless nuggets being offered for free on this forum, yesterday i heard a presentation from an investment counsel about their portfolio management strategies. The kind of counsel that will charge ya from 15k per annum & up just to handle yr portf.

they have 3 value-enhancing modalities for their portfolios. One is collarization. They offer a guaranteed return that's several percentage points above T-bill.

but you've already shown us, right here in this forum. How to do it, how to collar. For free. One of the nuggets. Thank you.


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## kcowan (Jul 1, 2010)

Actually, I was wondering if it might be worth it to create a sticky or two which is an encapsulation of the various nuggets for investing. What see yee moderators?


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## andrewf (Mar 1, 2010)

For what it's worth, I think it's likelier that 70-80% of investors trail the index by a bit to a lot while the rest pick up the alpha. Alpha is zero sum, and all those hedge funds out there are getting it from somewhere.


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## andrewf (Mar 1, 2010)

And whether you're a stock picker or an index true-believer, I think we can all agree that the sorriest soul is the hapless individual invested in a series of high fee 'actively-managed' (ie, closet indexers) funds, guaranteed to trail the market 2.5% due to MER year after year.


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## humble_pie (Jun 7, 2009)

andrew this is amazing progress.

you're saying that 20-30% of bespoke investors can beat the index ?

i was saying 50% but am willing to negotiate down.

35-38 % ? that's a helluva opportunity, i'd say.


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## andrewf (Mar 1, 2010)

humble_pie said:


> andrew this is amazing progress.
> 
> you're saying that 20-30% of bespoke investors can beat the index ?
> 
> ...


It's never been my contention that stock pickers underperform every time all the time, just that they tend to. That's ridiculous. There's the occasional person who wins the lottery too and comes out ahead over their lifetime. Not so for 99% who play, of course.

By the way, my offer to pay you two and twenty still stands if you can consistently beat the index. I don't know why you're wasting your time on your own portfolio when you could be running a hedge fund and raking in the fees for your talent.


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