News & Views from Around the Web
What Does Retirement Mean?
"Retirement has changed. It’s no longer about getting your gold watch and playing golf all the time. Retirement is now a frame of mind – you’re retired when you can do what you want. It doesn’t necessarily have anything to with whether you are drawing a paycheck or...
Career Risk Traps Advisors Into Taking On Excess Risk
"There is a big difference between a financial advisor or portfolio manager and an individual investor. The difference is the “career risk” of underperformance from one year to the next. Therefore, advisors and managers MUST own the assets that are rising in the...
There is no Persistence in Mutual Fund Performance
"Exhibit 1 illustrates that the percentage of top-half actively managed domestic equity funds consistently remaining in the top half over a five-year period (see Report 2) was less than a random distribution would suggest, evidence that active outperformance, when it...
Warren Buffet’s $1 million Bet
"In 2007, legendary investor Warren Buffett made a $1 million bet against Protégé Partners that hedge funds wouldn’t outperform an S&P index fund, and he won."
Underperformance Rates are “Abysmal” for Active Managers
"After five years, the percentage of large caps underperforming benchmarks is 84%, and this grows to 90% and 95% after 10 and 20 years respectively."
Can Stock Pickers Fight the Rise of Passive Investors?
"'Don’t look for the needle in the haystack. Just buy the haystack.' Though many still tout their stock and bond picking credentials, active fund managers only rarely generate alpha (or market-beating returns). In the long term the index tends to win, substantiating...
How Much Room is There for Active Management?
"Something happened late last year that had long been predicted in the asset management world, but nonetheless was a major event: money in index funds overtook the assets in active ones <because> the majority of actively managed funds are underperforming passively...