tar42: It seems, Chin, that some active invesotrs see value in certian mkts and react to those conditions to preserve their portfolio value. One can buy stocks that offer good value rather than 'staying the course' with their funds through thick and thin. The MM, and individual stocks offer me opportunites in mkt down turns that the passive investors either doesn't understand or wishes not to understand. . . .
The information that is available on every fund or stock and mkt conditions are what I employ when making investment decissions..............the passive investor, it seems, couldn't care less about mkt conditions or what M*, or any other information offered has to say about the future economy.
Hi Tim,
That is because M* is just another part of the Wall Street sausage grinder that chews up and spits out investor returns. I have already explained it was M* along with all the other investment rags and sites you have sited that put investors in the market beating funds of the 90s, and caused them to lose their shirts - double the loss of the S&P 500 - the DALBAR study I pointed you to earlier.
Even forgetting the benefits of asset allocation, 100% S&P 500 wouldn't have done near the damage the Wall Street media did to investors in 2000 - 2003.
The Wall Street media chases after success stories, and it is these success stories, such as the M* 5 Star funds of the late 90s, that sucked in the faithful.
The passive investor who uses both index funds and low cost managed funds, sets up their portfolio per the common sense asset allocation and costs of doing business, do not need to follow the Wall Street Media, and do not need to concern over year to date returns, as they realize year-to-date returns do not offer any evidence of the actual risks we face in investing, the risk the money you need will be there when you need it.
Instead of scampering around with the crowd, the passive investor can kick back and watch all the commotion without worry. By being prepared, the 5Ps I spoke of, we do not need worry every time the market takes a dive, as we are prepared, as we systematically take off the top while the market gained, and will systematically buy while the lemmings run the prices down to bargain basement. When Wall Street runs these investors back into the stock market, we will take off the top some more.
I appreciate all of what Wall Street does for the passive investor, but don't like to see my friends become victims of their wiles.
The passive investor understands a little better than you think.
Chin
