Home › Forums › Open Discussion › Hey, Warren Buffet is talking to you…
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February 28, 2014 at 6:19 pm #610599
wakefloodParticipantSince we’ve had a few discussions recently about retirement investing and maybe even MORE importantly, because we have an “efhutton” in da house now, I thought I’d post a little tidbit from the Oracle of Omaha who is speaking to you. Directly.
Here’s an excerpt:
“A very low-cost index is going to beat a majority of the amateur-managed money or PROFESSIONALLY-managed money,” Buffett said at a press conference…”
Basically, you’re gonna’ lose big $ over time if you choose actively managed funds vs. picking a solid index fund with low fees and forgetting about it. That’s right, set it and forget it works better than spending a few hours a day/week/month trying pick equities on your own, or choosing funds that move $ around frequently and/or have high fees. Guess which ones Wall St. tells you you should pick??
The link: http://www.reuters.com/article/2007/05/07/berkshire-indexfunds-idUSN0628419820070507
As an aside – watching the blowhards on CNBC and Bloomberg just rots your brain with minutia and blathering designed to get you to think that these folks can consistently predict performance better than an index. Hooey.
Those stations remind me of reading Golf Digest. If you read that magazine for a period of a few years, you will literally see directly conflicting suggestions on fixing your swing. They have to print something every month so they ask another guy/gal who very likely tells you that what the last “expert” told you is completely wrong. OK, thanks for that.
February 28, 2014 at 6:57 pm #805034
SmittyParticipantI agree for the most part, however I have had some success, so it can be done.
If you have the time to complete you due diligence, follow your companies news/quarterly results/rumors it can be fun.
Just remember to bring up your trailing stop orders (to protect/lock in gains).
I rode AAPL from $95~$350 (got out too soon!) and am currently riding FB from $30.
My stops are typically 7% below the current price.
That said – this is a SMALL portion of my portfolio. Buffett is correct.
February 28, 2014 at 7:27 pm #805035
skeeterParticipantSkeeter, the self-labeled “Oracle of West Seattle” has some thoughts on this of course.
The majority of my retirement savings are in mutual funds. A big chunk is in an S&P index fund. I do, however, also have a decent chunk in the Fidelity “Freedom Fund 20xx” funds. These are funds that target a particular retirement date. They are seemingly well managed and have pretty low fees.
I do enjoy picking some individual stocks and having fun. My best pick in the past few years was PCP, which I’m still holding. Check out the five year chart on them. I’ve had a couple losers too, of course.
The stock market crash of 2008-2010 has actually helped me immensely. I sold nothing during 2008-2010 and continued to buy during that period, so I’m way, way, up since everything purchased during 2008 to 2010 has basically doubled.
February 28, 2014 at 7:48 pm #805036
wakefloodParticipantThat basically describes my strategy as well, Skeets. I’ve had a couple of good picks/runs and a few mistakes, as we all do.
The issue being that the vast majority of folks don’t have the capacity/time/risk-available funds to do what we do. I know some very smart folks who’ve done exactly what big investment companies have told them and also done a little of their own “homework” who are hundreds of thousands of dollars to the worse than they would have been using the set it and forget it strategy.
All of which is to say, sheep are for shearing – even smart ones.
February 28, 2014 at 8:35 pm #805037
skeeterParticipantYup, I agree Wakeflood. The index fund is going to be the best choice for about 99% of investors out there, including me.
Are there still personal stockbrokers out there? Must be. I can’t imagine why anyone would pay a stockbroker when every study says (a) stockbrokers do not consistently beat the index and generally do worse than the index and (b) they will charge you far, far more in fees. It’s a lose-lose deal for the investor.
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