Most of the quotes on this page refer to index investing. Our Investment Strategy section shows that asset class investing adds engineering and sophistication to the index investing model.
There is a interesting article on Portfolio.com about Blaine Lourd called “The Evolution of an Investor“. We like to share this with our clients as it helps to reflect how we too, have evolved as investment advisors into our current investment strategy.
“Thousands of money managers all look equally good or bad. Each expects to do 3% better than the mob. Each has put together a convincing story. After the fact, hardly 10 out of 10,000 perform in a way that has a long-term edge over the index”.
Paul Samuelson, Economist, Nobel Laureate
“Properly measured, the average actively managed dollar must underperform the average passively managed dollar, net of costs.”
William F. Sharpe, Professor of Finance, Nobel Laureate
“All the time and effort that people devote to picking the right active manager, have in most cases led to no advantage. Unless you were fortunate enough to pick one of the (very) few funds that consistently beat the averages, your research came to naught.”
Peter Lynch, Legendary Manager of Fidelity Magellan
“Our stay-put behaviour reflects our view that the stock market serves as a relocation center at which money is moved from the active to the passive.”
Warren Buffett
“Even if you identify the managers who have good past performance, there’s no guarantee that they’ll have good future performance.”
George Sauter, Managing Director, The Vanguard Group
“Trying to pick tomorrow’s winning fund based on yesterday’s performance is difficult if not a futile task. Constantly switching your money from one fund to another is an expensive habit that is harmful to your net worth.”
Peter Lynch, Legendary Manager of Fidelity Magellan
“The central proposition of charting is absolutely false, and investors who follow its precepts will accomplish nothing but increasing substantially the brokerage charges they pay. There has been a remarkable uniformity in the conclusions of studies done on all forms of technical analysis. Not one has consistently outperformed the placebo of a buy-and-hold strategy.“
Burton Malkiel
“On average, 90 percent of the variability of returns and 100 percent of the absolute level of return is explained by asset allocation.”
Roger Ibbotson and Paul D. Kaplan
“A Copernican Revolution… the most fundamental thing that has happened to the investment process – the development of Modern Portfolio Theory, the Theory of Efficient Markets, the scientific understanding of risk/return relationships and the importance of diversification in portfolios.”
John H. Langbein, Chancellor Kent Professor of Law & Legal History at Yale University Law School Reporter
“Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little.”
Fred Jr. Schwed
“The statistical evidence proving that stock index funds outperform between 80% and 90% of actively managed equity funds is so overwhelming that it takes enormously expensive advertising campaigns to obscure the truth from investors. In fact, one of the reasons that actively managed equity funds underperform stock index funds is because they are spending so much money to advertise — money that otherwise would be invested on behalf of the mutual fund shareholders.” Internet Advisor, “The Motley Fool
“Individuals aren’t as bad at picking stocks as many people think. They’re worse.”
Terrance Odean, Professor of Finance
“After twenty years of watching (active) investment practitioners dance around the fire shaking their feathered sticks, I observe that far too many of their patients die and that the turnover of medicine men is rather high. There must be a better way.”
John C. Bogle, Sr., Former Chairman & Founder, The Vanguard Group
“If there’s 10,000 people looking at the stocks and trying to pick winners, one in 10,000 is going to score, by chance alone, a great coup, and that’s all that’s going on. It’s a game, it’s a chance operation, and peoples think they are doing something purposeful…but they’re really not.”
Miller, Merton, Nobel Laureate and Professor of Economics, Univ. of Chicago
