Down Wall Street and John Bogle’s Common Sense on Mutual Funds, among many others. What I discovered in the pages of those books was nothing short of stunning, but can easily be summarized as this: managers don’t beat markets. At first I asked, “How could this be? We have all these managers in the world who are in business to beat the market, and yet, they’re not beating the market. The market is beating them.” It struck me like a bolt of lightning: I didn’t just have the wrong brokers and managers, I had the wrong investment strategy altogether. With all of the time, effort and money spent trying to find the next hot stock or mutual fund manager, I would have been far better off had I simply bought, held and rebalanced a portfolio of index funds. How much better off? When I compared my own actively managed portfolio’s performance against the value of a risk-appropriate passively managed portfolio, I was struck with the harsh reality of the price I paid for my lack of investing knowledge. I call this my $30 million investment lesson. I paid a very steep price for relying on an industry that profits handsomely when investors are kept in the dark. I wondered just how many others had paid a high price for too little knowledge and too much trust. I questioned how many more would suffer before the investment industry would awaken to its very own Howard Beale who would finally muster the courage to step before the CNBC cameras to declare, “I’m mad as hell, and I’m not going to take it anymore.” Awestruck by the glut of misinformation that served as the
Published on Jun 1, 2015
This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...