Bear the Risk
funds investing. David Swensen, Chief Investment 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 merits of index investing for individual and institutional investors alike. In an August 2011 article which appeared in the New York Times, Swensen blasted active investing and its facilitators, including mutual fund companies, retail brokers and advisors. He said that market volatility causes ill-advised investors to behave “in a perverse fashion, selling low after having bought high.” He asks, “What should be done? First, individual investors should take control of their financial destinies, educate themselves, avoid sales pitches, and invest in a well-diversified portfolio of low-cost index funds.”25 So what is the lesson here? Like the illustration on the following page titled Bear the Risk, when you fully embrace a new way of investing, you can substantially reduce the stress and anxiety commonly experienced by active investors. You should be calmer, relaxed and more centered in the midst of the noise and frenzy of media pundits and Wall Street. An unwavering commitment to your investment plan should allow you to let go of unnecessary worry and enable you to focus on what truly matters to you most. You should not only be rewarded emotionally, but you will also improve your probability of investment success. Why would you want to do anything else?
This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...
Published on Jun 1, 2015