Nothing new here. Mutual funds are just a way for fund managers to charge inflated management fees for average to below average returns. Get a basic index fund and save the fees. The few years the managed funds beats the index funds will easily be offset by all the fees and other gotchas.
only problem with the index funds Is you have to buy the dogs in the index an active managed fund can get out of situations like the uk supermarkets and banks.
I number of my actively managed investments did this so now an index fund will realistically always under perform this active fund.
The entire point of decades of research, and the above article, is that next to nobody can reliably tell you in advance which stocks are "the dogs." I'm glad for you, but if you want to convince me your active funds can reliably beat the market you would need to provide me a lot more data, as you are swimming upstream against a raging torrent of empirical research.
> And Mr Buffet's investment company has beaten wall street for decades.
The difference is that he has significant inside information into many of his investments. He deeply researches the companies involved, talks to their owners, etc. He is far smarter than your average investor but he also purchases companies with far more information than your average investor.
This is a great point. Warren doesn't just hand his money over, he buys a controlling share and starts telling companies what to do. Very different from a passive investor.
It's not clear to me whether you meant to accuse Mr. Buffet of criminal behavior, here. There is certainly public information that is harder to get than other public information, but trading on inside information is a crime.
Public / Private information is only an issue when companies are publicly traded.
If you go to buy a private company you can get a lot of non public information. The same thing happens when you try and take a public company private with the caveat that you can only use that information to back out of a deal not make your first offer. AKA, you get to do an audit after the terms where agreed upon and only get to back out of you discover major issues.
I suspect jayvanguard is not talking about Berkshire Hathaway's public company investments (for which I'm sure Buffett does not use material non-public information) but Berkshire Hathaway's private company investments and acquisitions. These make up more than half the company's market cap, I believe.
not a first he didn't its only when you fund get that's big you have to start taking big positions. And fund mangers out and talk to companies - do you think that Neil Wollford does'nt have similar access
And Tesco didn't work out to well for him anyone who follows the markets could have told you that the supermarket where doing lots of dodgy stuff
The very name Berkshire Hathaway came from a failing textile company that Buffet bought control of. Incidentally, he regards it as the biggest investment mistake he ever made.
And the article misses the down side of index funds tracking errors and having to keep funds univested to account for redemptions and the fact that some types of investments hare hard to run as an index fund PE and VC
Index funds are usfull for some investors for some of their investments but they are not the holy grail.
The point is that those active funds mess it up so badly when the market is doing well that the performance of the index funds is still better over the long run.
Some do you just have to know what your doing and be prepared to invest against the market BKY LWY and TRY in the UK have done very very well for me over that last decade.
many of my long term active investments have beaten the market over 10 years by over 100% you just need to look at the ones with 50-100 years track records
Look at the average IT vs Unit trust vs bench mark
