managed funds or hedge funds chosen by Protege Partners, a prominent New York-based asset management firm. Passing the 6-year mark on December 31, 2013, the Vanguard fund picked by Buffett is up by 43.8%, while the five hedge funds have gained only 12.5%. Since it is highly unlikely this will reverse, our money is on the Oracle of Omaha. Many highly respected financial experts affirm Buffett’s high regard for index funds. In his book, Charles Schwab’s Guide to Financial Independence, Schwab revealed, “Most of the mutual fund investments I have are index funds, approximately 75%.”22 Benjamin Graham, influential economist and mentor to Warren Buffett, spent most of his professional life analyzing companies for stock market bargains. However, shortly before his death in 1976, Graham rejected his longheld belief that investors could expect to beat Benjamin Graham the market through individual stock analysis. Graham was visionary in his early description of what is now known as a value index fund. Noteworthy institutional investors also advocate index funds investing. David Swensen, Chief Financial Officer of the highly successful Yale Endowment Fund and author of Unconventional Success: A Fundamental Approach to Personal Investment23 and Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment,24 has been particularly outspoken about the pitfalls of active investing and the merits of index investing for individual and institutional investors alike. In an August 2011 article which appeared in the New York Times,
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...