05-30-2003, 9:30 PM | Post #85564 |
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I have just finished reading "Index Your Way to Investment Success" published in 1997 by Walter Good and Roy Hermansen. Here are some of its "Gems":
"For most individual investors, the benefits of indexing remain a well-kept secret because brokers, mutual funds, and other familiar sources of investment information routinely focus on products that offer substantially higher commissions or fees."
"Development of a long-term investment plan constitutes the most important single investment decision that you are likely to make."
"Investing with the wrong plan--or no plan--courts investment disaster."
"Self deception ranks among the most expensive of luxuries."
"The Vanguard Group, as the pioneer in bringing indexing to the individual investor, remains the leader by a wide margin."
"Private money management always was a vanity business." (N.Y.Times quote)"
"Every approach to investing entails costs--some hidden, others overlooked, and still others recognized but too easily ignored."
"Since we want to believe that we have made wise investments, we look for evidence to support our belief."
"Diversificatrion--because it limits portfolio risk without limiting expected return--is sometimes described as the nearest thing in investing to a 'free lunch."
"Average returns for each of the three key portfolio components--stock, bonds, and cash--have varied significantly with the choice of time period."
"Departing from the index fund plan implies superior insight into the outlook for the financial markets."
"Index funds cannot entirely avoid capital gains but generally hold them to a much lower level."
"Despite the critical role of performance measurement, pursuit of perfect accuracy can become counterproductive."
"You cannot ignore taxes, since they directly reduce your investment return."
"Build your index fund portfolio plan to provide broad representation in both equities and fixed income securities."
"Expenses and other deductions from returns are extremely important, but other considerations, such as services and access to other funds provided by the same fund family, may also influence your choices."
"This time is different is a message that resurfaces in every bear market."
"Staying on course may be just as difficult in bull markets as in bear markets."
"Investment flexibility may actually increase the risk that it seeks to avoid."
"The index fund advantage consists of lower costs, deferral of capital gain taxes, and control of risk through more complete diversification."
"Even highly qualified active portfolio managers repeatedly demonstrate how difficult it is to produce returns better than can be explained by chance."
"Don't let your choice of portfolios be influenced by current market forecasts, recent market experience or a choice by someone else."
"Index funds save on management and marketing expenses, reduce transaction costs, defer capital gain, and control risk--and, in the process, beat the vast majority of actively managed mutual funds!"
Originally posted in thread: 27555