Another book question

[rockrock]

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More info on what makes them so great here

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Merton and Scholes are on the board? After their involvment with the Long Term Capital Management disaster, who would let these academics advise anyone on investing?

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This is one of the most (if not the most) highly respected mutual fund companies (along with vanguard).

There were a lot of people involved with LTCM and their demise. I hardly think the blame lies at their feet.

[DesertCat]

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There were a lot of people involved with LTCM and their demise. I hardly think the blame lies at their feet.

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Yes, it does. Merton and Scholes were founding partners of LTCM (along with John Meriwether) and actively planned LTCM's strategies. They actively solicited investors for LTCM. They don't deserve all the blame, just a huge portion of it.

If they were trying to prove that academics can't beat the market without taking excess risk, they were a huge success. Of course, Buffett knows how, which is why he declined to invest in LTCM.

And after reading my other replies, I guess you realized your Efficient Market mantra was out of date and just plain wrong, which is why you don't have any real response.

[rockrock]

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There were a lot of people involved with LTCM and their demise. I hardly think the blame lies at their feet.

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Yes, it does. Merton and Scholes were founding partners of LTCM (along with John Meriwether) and actively planned LTCM's strategies. They actively solicited investors for LTCM. They don't deserve all the blame, just a huge portion of it.

If they were trying to prove that academics can't beat the market without taking excess risk, they were a huge success. Of course, Buffett knows how, which is why he declined to invest in LTCM.

And after reading my other replies, I guess you realized your Efficient Market mantra was out of date and just plain wrong, which is why you don't have any real response.

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To be honest I don't know enough about LTCM but plan on reading When Genius Failed to find out.

Effecient Market Hypothess is hardly dead and I am not sure what lack of responses you are referring to.

I believe the market to be effecient for the individual investor. He is up against too much information, too many eyeballs and too much money to win.

He is virtually guaranteed to fail against the indexes.

[DesertCat]

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I believe the market to be effecient for the individual investor. He is up against too much information, too many eyeballs and too much money to win.

He is virtually guaranteed to fail against the indexes.

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I'm an invidual investor. I've never had a losing year, never trailed the indexes, in fact on average I'm beating indexes by over 30% a year. Warren Buffett himself has promised that if he only had to manage $1M, he would guarantee 50% annual returns.

You don't understand how much inefficiency is in the small cap and micro-cap arena. A disciplined value investor can achieve some amazing returns with a small portfolio.

I'm not saying it's easy. It's nearly a full time job for me, and my advice to other investors is typically the same as yours, buy index funds. But I just hate your use of the words "virtually guaranteed to fail", when there are thousands of investors like me beating the market intelligently with low risk, using nothing more than Ben Graham's and Warren Buffett's guidance and teachings.

[rockrock]

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I believe the market to be effecient for the individual investor. He is up against too much information, too many eyeballs and too much money to win.

He is virtually guaranteed to fail against the indexes.

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I'm an invidual investor. I've never had a losing year, never trailed the indexes, in fact on average I'm beating indexes by over 30% a year. Warren Buffett himself has promised that if he only had to manage $1M, he would guarantee 50% annual returns.

You don't understand how much inefficiency is in the small cap and micro-cap arena. A disciplined value investor can achieve some amazing returns with a small portfolio.

I'm not saying it's easy. It's nearly a full time job for me, and my advice to other investors is typically the same as yours, buy index funds. But I just hate your use of the words "virtually guaranteed to fail", when there are thousands of investors like me beating the market intelligently with low risk, using nothing more than Ben Graham's and Warren Buffett's guidance and teachings.

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Beating what market? What index???

The truth of the matter is that someone is always going to be beating their benchmark. A good example of this is top performing mutual fund listings. The top performing mutual funds in their respective categories is never an index fund but its virtually never the same fund year after year.

[DesertCat]

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Beating what market? What index???



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Vanguards Small Cap Index fund has returned an average of 7.5% a year the last 5 years. It's small cap value fund has returned 12.66%. These are pre-tax returns.

Since I started investing full time 5 years ago, my "after tax" returns have beaten indexes pre tax returns by 30% per year.

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The truth of the matter is that someone is always going to be beating their benchmark. A good example of this is top performing mutual fund listings. The top performing mutual funds in their respective categories is never an index fund but its virtually never the same fund year after year.

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This isn't one lucky year. I beat the indexes every year. My worst year is north of 30%.

Is it because I'm a genius? Far from it. Is it because I know something others don't? No, I just use Graham's and Buffett's techniques. One advantage is that unlike most individual investors I am able to work at it full time.

But most importantly, I have a small portfolio. It's so small that when I started, I need 20% returns just to feed my family. So you might say I have all the correct incentives, and all of the best options.