01-31-2002, 1:22 PM | Post #55158 |
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Browsing through the Miami Public Library, I came across an unusually good book properly titled, "Winning with Index Mutual Funds". It is written by Jerry Tweddell and Jack Pierce, two ex-brokers with 50 year's of experience in the brokerage businesss. It is full of gems like these:
"Without understanding the rudimentary principles of investing, most individuals place their faith in expert professionals. That faith is usually misplaced. How else can you explain the fact that most people continue to invest in funds that deliver below-average returns year after year?"
"You should know not only what brokers do FOR you, but also what they can do TO you"
"Customers may look to stockbrokers as advisors, but brokerage managers view them primarily as salespeople and distributors."
"Brokers are not paid to manage money: They are salespeople who receive commissions when they MOVE money."
"Brokers are just as likely to discourage trading as your barber is to tell you you don't need a haircut."
"You don't have to pay for an experet to invest successfully in index funds. With a very simple and basic understanding of index funds, you can consistently beat 70 to 80% of all professionally managed mutaul funds."
"Don't assume that because you pay more, you get more. Unlike just about any other business, it's backward on Wall Street: The more you pay for services, the lower your returns are likely to be."
"Don't pay too much attention to grand investment plans, no matter how thoroughly documented, that aim to go forward solely with a strategy that has 'always' worked in the past. History is ornery enough to introduce just enough new variables to make sure you can't win the next war using the last war's successful battle plan."
"Most of what you hear about investing is what Wall Street wants you to hear. The ringing index fund silence stems from the fact that there is almost no way Wall Street can profit from them--compared to their other merchandise."
"Numerious studies have shown that using superior past performance is no better than random selection."
"Pay the most attention to asset allocation; it is your most important investment decision."
"Trust in time and forget market timing. Allow time to work its compounding magic for you: let market timing inflict its miseries on someone else."
"Most academic studies have shown that investing in funds whose style or sector concentration is out-of-fashion is more profitable than those what are in vogue."
Keep score. If your funds are providing the market returns, leave them alone. Resist the temptation to improve on things. If they aren't, the quickest way to 'catch up' is to index."
"Aiming for 'only' average returns is simply more than some fund investors can bear, even though millions of them would be billions of dollars richer had they achieved 'only' average returns the last two decades."
"Don't get carried away by the lure of state-of-the-art index sophistication and pay too much in advisor fees because you'll lose one of indexing's main advantages: low costs."
"The compelling argument for index funds is that the compounding cost savings, the law of averages, and the passage of time are all working in concert for you yeaar after year. Importantly, they defy human intervention--yours or the professional--and continue to work in your hehalf whether you're paying attention or not."
"Every January 1, fund shareholders start out the year with only one certainty: They will pay their fund's operating cost and invest only what's left over."
"Trust not in the experts, but in the market itself and in your own intuition and intelligence."
"Keep it simple. Investment success depends on asset allocation, diversification, and risk management, not on complexity."
Originally posted in thread: 17128