Beating the Market: As Easy as Shooting the Moon
Top 5 of the Week of August 14
In our Top 5 this week, The Irrelevant Investor Michael Batnick reveals why financial advisors should probably be worried. Lawrence Hamtil, writing for Fortune Financial Advisors, suggests that our perspective on today’s bull market is all wrong. And Joshua Brown, The Reformed Broker, responds personally to Howard Marks’ memo.
Writing for CFA Institute, Wesley Gray reveals every investor’s mission impossible. And author of Pragmatic Capitalism, Cullen Roche, explains why indexing isn’t quitting…
Are the Robots Taking Over?
- Active management, specifically its fees and underperforming capabilities, has a bad reputation
- But this negative rep is never actually assigned to the “lousy financial advisors” who move money through these funds
- There are 249,400 financial advisors in the United States, odds are not necessarily in your favor of finding a good one—it’s looking better all the time for robo-advisors though
A Misunderstood Bull Market
- Born after the biggest crisis in decades and now the longest running bull market on record, today’s current cycle is “perhaps the most misunderstood” in history
- Remove any bias about the bull market and it’s actually not that noteworthy, it’s the negativity surrounding it that’s driving investors’ mistrust
- As with market cycles in the past, it will undoubtedly end at some point to great hurrah from some investors who will have no better idea about the next bear market than they had about this one
Think today’s bull market is misunderstood? Share your comments in the section below
A Volley Back at Howard Marks
- People are investing speculatively: This is by no means new information, look back at historic data and you will always find examples of them doing this
- Now is a time to be cautious: But when isn’t there a time to be cautious? Everyone should invest as though “the best is yet to come but the worst could be right around the corner”
- To conclude: Caution should influence every investor’s mindset all the time, whatever is happening on the world stage
Beating the Market: As Easy as Shooting the Moon
- Even though investors like Warren Buffett make it look easy, beating the market forever is nigh on impossible
- But hang on, Buffett is not the only one to have outperformed; research is dotted with investment strategies that have yielded abnormal returns
- If you were to beat the market all the time, in time you would earn all the wealth within it and become the market—once you own the stock market, you’re not outperforming it
“It Is Impossible to Be a Purely Passive Investor”
- Being a passive investor isn’t about taking the easy way out and not caring about market valuations or expected returns
- Because there is still a significant amount of “active” investing involved in indexing; from picking a strategy to choosing the allocation or factors involved
- By choosing indexes based on selected parameters, you potentially take a more considered approach to investing than active investors, plus you tick the diversification box too #winning
Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.
Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!
Do you like Top 5 of the Week? Feel free to share it with your friends.
DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.