What caught my eye this week.
i often worry that we don’t bang the drum enough to passively invest Maneuver these days.
It’s not that we’ve changed our mind that using index trackers is the way forward for most investors. Far from it!
Moreover, if you beat the drum every week, you start to feel like a slave – and ordinary readers start to have a headache.
Maneuver advocated passive investing more than a decade ago, when there was little coverage in the mainstream British media. There is tons of articles in our archives about why and how to do it.
Maybe they should be updated and reissued more often to give them a fresh air?
The trouble with a blog – unlike, say, a book – is that you never know where someone is going to start. The reader may be on his 500th article or his first.
I’m supposed to use our fancy new email system to create a sort of automatic crash course in passive investing for new money subscribers. Watch this space…
For the record, though, unless you have special access, some are rare edges when choosing winning active funds – or you have non-standard goals such as ESG investing or a desire for an unusual return profile – than the evidence supporting index funds has only grown.
Most people accept it nowadays. Even the active manager is redoubted, like the personal finance section Financial Timeswho wrote this week:
In the first six months of this year, nearly two-thirds (60 percent) of actively managed equity funds fell further than the market.
Yes, you read that right.
Actively managed funds — where you pay extra for a team of well-paid fund managers who pick stocks they think will do best — are actually underpowered by passive funds that simply track the nearest comparable index.
There’s also an interesting table showing how active managers have been over ten years.
Note that some clear better-than-average successes – such as the 63% outperformance in the UK market – can generally be explained by factors such as holding smaller companies than the benchmark. (And if so, it could be replicated more cost-effectively by getting broad, low-cost exposure through a tracker fund and combining that with, say, a 20% small-cap allocation.)
However, part of the upside will be a true alpha build by skilled stock pickers. Never think active managers are lazy or stupid!
It’s the other way around, that’s why it’s so hard for them to beat each other. (The math also guarantees worse than average performanceafter fees).
Fine collection
i active stock picker, remember. I don’t think beating the market is myth and magic.
No, there is a difficulty you determine who will beat the market ahead of time.
Get it wrong – as you probably will, statistically speaking – and you’ve wasted 30 years on more expensive funds. As a result, you will retire poorer.
Who needs you to take that risk? Only active fund managers on whom big earnings depend.
So much for remedies – here’s some evidence this week Alpha architect that most of us shouldn’t pick stocks either. Ha hum.
Have a great weekend everyone.
From Monevatar
We have completely renovated ours broker comparison table – Maneuver
From the archiver: there is something to lose – Maneuver
News
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Martin Lewis warns households could face £3,500 for electricity this winter – Yahoo Finance
Britain’s financial regulator has published consumer charges for financial services companies – FCA
US GDP falls for second straight quarter; in technical decline – CNBC
UK inheritance tax revenue up 14% year-on-year to £6.1bn – UNS
Pension tax change to boost pay for low earners – Which one
Due to inflation, the average household spends £89 more each month on energy, food and fuel – Guardian
UK car production down almost 20% year-on-year – This is Money
The world has become less motley [Thread] – through Twitter
Products and services
Choosing savings in a period of high inflation [Search result] – FEET
What are creditless cards and can they help stop fraud? – Which one
Parents are urged to buy school uniforms earlier due to supply problems – Guardian
Open a SIPP with Interactive Investor and pay no SIPP fees for six months. Conditions apply – Interactive investor
Virgin Money increases its ‘linked’ savings account to record 1.71% – This is money
Energy bill: who is eligible for £400 discount? – Guardian
Problems of rich people: “Should I ditch the Amex Centurion Card?” [Search result] – FEET
Seven things to know about the new prepaid funeral plans – Which one
Houses for sale with car charging points, in the photo – Guardian
Comment and opinion
More Hemingway, less Faulkner – Good luck and friction
Knowing what not to do and not doing it are different things – Behavioral investment
Staying Rich – A modest dollar
Fries with that? – Sex Health Money Death
Are children worth the cost? [A couple of week’s old] – The root of all
Interview with Escape artist about financial independence [Podcast] – This is money
“It’s Different This Time” and Other Investment Mistakes – Darius Faure
How to make your grandson a millionaire on £2,800 a year – This is money
Three keys to successful investing – Roman Investor
What the Fed’s Large Balance Sheet Means for Markets [Podcast, nerdy] – Strangers
Spend more mini specials
Another side of investing is The banker is on fire
Why this advisor tells his clients “pension is out of date” – Think Advisor
What about the FUN debt? – Budgets are sexy
Naughty corner: Active antics
Howard Marks: I beg to decline [PDF] – Oaktree Capital
Bonds attractive after “horror” first half – Bloomberg via Capital management
Buffett’s pension – A modest dollar
A collection of charts that show how markets can confuse you – Connection of advisers
Be thankful for your trading losses – All star maps
There is an ecosystem [US] ETFs trade proprietary products Cathie Wood/ARK – Yahoo Finance
Crypto corner
Tim O’Reilly on comparing Web 3 and Web 2.0 [Podcast] – Rational reminder
Kindle books at a discount
The First Minute: How to Start Conversations That Get Results Chris Fanning – £0.99 on Kindle
Thinking Better: The Art of Quick Access author: Marcus du Sotoit – £0.99 on Kindle
Bank on It: How I Destroyed an Industry Ann Boden – £0.99 on Kindle
Amazon Unbound: Jeff Bezos and the Invention of a Global Empire brad stone – £0.99 on Kindle
Environmental factors
Big Oil’s Audacious PR Project To Sow Climate Change Doubts – BBC
Where will the new Sizewell C nuclear reactor get its water? – Guardian
Human pathogens hitchhike on floating plastic – Hakkai
…and many other disadvantages of the world that cleans – BBC
Air conditioning is a climate disaster, and Bill Gates is investing in this startup to fix it – CNBC
Tiny turtle rescued from Sydney beach spent six days stinging ‘pure plastic’ – Guardian
Singapore turns multi-storey car parks into farms – BBC
The Turbulent Future of Deepwater Wind Farms – Hakkai
Outside of us
Remote, hybrid or in-person? – AVC
Mild recessions, wilder careers – Dror Poleg
Tails, you won – Morgan Howell
How robots can help us act and feel younger – IEEE
Pandemic impulse buys we hated – Vox
90% of spreadsheets contain errors – Clement about investments
And finally…
“If you live to have everything, what you have is never enough.”
– Vicky Robin, Your money or your life
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