Charles D. Ellis > Quotes

“After adjusting the comparison of index funds to actively managed funds for survivorship bias, taxes, and loads, the dominance of index funds reaches insurmountable proportions. Once”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“An active manager must overcome the drag of about 3.25 percent in annual operating costs. If the fund manager is only to match the market’s historical 9 percent return, he or she must return 12.25 percent before all those costs. In other words, to do merely as well as the market, an active fund manager must be able to outperform the market return by over one-third or 34.1 percent!5”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“Keeping skills up to date requires the investment of time, effort, and perhaps even money for tuition. But it’s worth it for an extra decade of productive activity.”
― Charles D. Ellis, Falling Short: The Coming Retirement Crisis and What to Do About It

“The core principles of successful investing never change—and never will. In fact, when short-term data appear to be most challenging to core principles is exactly when those principles are most important and most needed. Sure the companies, markets, and economies come and go, but the core principles remain the same.”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“successful firms do flourish by holding fast to fundamental values: sticking to the right path; taking the long-term view; and insisting always on quality and excellence.”
― Charles D. Ellis, Capital: The Story of Long-Term Investment Excellence

“Spending a few more years in the labor force greatly increases monthly Social Security benefits. Under the program’s current structure, participants can start collecting benefits at any age between 62 and 70.2 But, to maintain fairness, benefits claimed before 70 are actuarially reduced so lifetime benefits are made roughly equal for both early and late claimers. These adjustments are very significant. Monthly benefits for those who start claiming Social Security benefits at 70 are a full 76 percent higher than for those who start taking benefits at age 62 (see table 4.1). (If working longer also raises the average level of our 35 years of earnings used in the Social Security benefit calculation—which it probably will—the increase could be even greater.)”
― Charles D. Ellis, Falling Short: The Coming Retirement Crisis and What to Do About It

“Before examining the many powerful changes in the investment climate, let’s remind ourselves that active investing is, at the margin, always a negative-sum game. Trading investments among investors would by itself be a zero-sum game, except that the large costs of management fees and expenses plus commissions and market impact must be deducted. These costs total in the billions every year. Net result: Active investing is a seriously negative-sum game. To”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“A dearth of fiduciaries willing to place client interests foremost forces individuals to take responsibility for their investment portfolios. In the profit-motivated world of Wall Street, fiduciary responsibility takes a backseat to self-interest. What benefits the stockbroker (commissions), the mutual fund manager (large pools of assets), and the financial advisor (high fees) injures the investor. When profit motive meets fiduciary responsibility, profits win and investors lose. Understand”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“Tax-efficient index funds garner a substantial edge over tax-inefficient actively managed mutual funds.”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“Markets, on the other hand, do recover, so the great risk to individual investors, as it has been so often before and will be again and again, is not that the market can and will plummet, but that investors will get frightened into liquidating their investments at or near the bottom and will miss all the recovery, thus turning the temporary market loss into a permanent capital loss.”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing, Eighth Edition

“As market expert Jason Zweig puts it, “If we shopped for stocks the way we shop for socks, we’d be better off.” We are wrong when we feel good about stocks having gone up, and we are wrong when we feel bad about stocks having gone down.”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“Investment management, as traditionally practiced, is based on a single core belief: Investors can beat the market and superior managers will beat the market.”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“(Regression to the mean, the tendency for behavior to move toward “normal” or average, is a persistently powerful phenomenon in physics and sociology and investing.) Yes, several funds beat the market in any particular year and some in any decade, but scrutiny of the long-term records reveals that very few funds beat the market averages over the long haul—and nobody has yet figured out how to tell in advance which funds will do it. The”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“TIME IS ARCHIMEDES’ LEVER in investing.    Archimedes is often quoted as saying, “Give me a lever long enough and a place to stand, and I can move the earth.” In investing, that lever is time. (And the place to stand, of course, is a firm and realistic investment policy.)”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“Holding onto a sound policy through thick and thin is both extraordinarily difficult and extraordinarily important work. This is why investors can benefit from developing and sticking with sound investment policies and practices. The cost of infidelity to your own commitments can be very high. An”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“The great advantage of indexing investment operations is that we can avoid the vain search for superior performance and concentrate our time and energy on investment policy and asset-mix decisions. Instead, it focuses your attention on the most important decision in investing: defining the long-term “policy” portfolio that will both minimize the risk of avoidable mistakes and maximize the chances of achieving your true investment objectives.”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“Yet Catchings would in just ten years very nearly destroy the firm, proving once again that articulate optimists encouraged by early successes and armed with financial leverage can become hugely destructive.”
― Charles D. Ellis, The Partnership: The Making of Goldman Sachs

“Doing thousands of little things, day after day, inching along as consistently as you can, in the right direction as best you can tell, is management—and motivating or inspiring everyone to work together for long-term purpose is leadership.”
― Charles D. Ellis, The Partnership: The Making of Goldman Sachs

“For all its amazing complexity, the field of investment management really has only two major parts. One is the profession—doing what is best for investment clients—and the other is the business—doing what is best for investment managers. As in other professions, such as law, medicine, architecture, and management consulting, there is a continuing struggle between the values of the profession and the economics of the business. Investment firms must be successful at both to retain the trust of clients and to maintain a viable business, and in the long run, the latter depends on the former. Investment management differs from many other professions in one most unfortunate way: it is losing the struggle to put professional values and responsibilities first and business objectives second. To”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“As the period over which returns are measured is lengthened, the short-term volatility in returns caused by fluctuating changes in the discount rate becomes less and less important and the expected dividend stream or interest payments, which are much more stable, become more and more important.”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing, Eighth Edition

“THE PRINCIPAL REASON WE SHOULD ALL ARTICULATE OUR LONG-TERM investment policies explicitly and in writing is to protect our portfolios from ourselves.”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“If investing is all about creativity and making unusual, unconventional, and even unpopular decisions, great investment decisions are best made by individuals taking direct responsibility for the results of their own acts.”
― Charles D. Ellis, Capital: The Story of Long-Term Investment Excellence

“At least 80 percent of Capital’s most important decisions have been ‘No’ decisions: active, carefully thought-through decisions not to take a specific action. That’s why one of the hallmarks of Capital is how seldom it makes major mistakes.”
― Charles D. Ellis, Capital: The Story of Long-Term Investment Excellence

“Like the weather, the average long-term experience in investing is never surprising, but the short-term experience is always surprising.”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“Since most investment managers will not beat the market, investors should at least consider investing in “index funds” that replicate the market and so never get beaten by the market. Indexing may not be fun or exciting, but it works. The data from the performance measurement firms show that index funds have outperformed most investment managers over long periods of time. For”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“Talented people want recognition and respect for their skills and their achievements even more than they want money. They need and appreciate acceptance and respect.”
― Charles D. Ellis, The Partnership: The Making of Goldman Sachs

“Even though most investors see their work as active, assertive, and on the offensive, the reality is and should be that stock and bond investing alike are primarily a defensive process. The great secret for success in long-term investing is to avoid serious losses.”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“Emerging markets investing, where Capital is far and away the world leader1 came very close to never happening. “David Fisher is the one who said, ‘This is where the future lies. Let’s go for it!’” explains Bob Kirby.”
― Charles D. Ellis, Capital: The Story of Long-Term Investment Excellence

“The overwhelmingly large number of investors should seek membership in the passive management club. This group, instead of scratching for a small edge in today’s extraordinarily efficient markets, wisely accepts what the markets deliver. Charley makes a compelling case for the market-matching strategy of investing in index funds, touting their simplicity, transparency, low cost, tax efficiency, and superior returns. Winning”
― Charles D. Ellis, Winning the Loser's Game: Timeless Strategies for Successful Investing

“How can institutional investors hope to outperform the market... when, in effect, they are the market?”
― Charles D. Ellis