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Why You Will be Wise to Index Now And So Will Almost All Investors
The evidence-based approach to a more worthwhile portfolio. The Index Revolution argues that active investing is a loser's game, and that a passive approach is more profitable in today's market. By adjusting your portfolio asset weights to match a performance index, you consistently earn higher rates of returns and come out on top in the long run. This book explains why, and describes how individual investors can take advantage of indexing to make their portfolio stronger and more profitable. By indexing investment operations at a very low cost, and trusting that active professionals have set securities prices as correctly as possible, you will achieve better long-term results than those who look down on passive approaches while following outdated advice that no longer works. "Beating the market" is much harder than it used to be, and investors who continue to approach the market with that mindset populate the rolls of market losers time and time again. This book explains why indexing is the preferred approach in the current investment climate, and destroys the popular perception of passive investing as a weak market strategy. All great investors share a common secret to rational decision-making based on objective information. The Index Revolution shows you a more rational approach to the market for a more profitable portfolio.
- GenresPersonal Finance
240 pages, Kindle Edition
Published August 30, 2016
1 person is currently reading
29 people want to read
About the author
Charles D. Ellis
98 books85 followersCharles “Charley” D. Ellis is an American investment consultant. In 1972, Ellis founded Greenwich Associates, an international strategy consulting firm focused on financial institutions. Ellis is known for his philosophy of passive investing through index funds, as detailed in his book Winning the Loser’s Game.
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Displaying 1 of 1 review
October 8, 2017
What is an index fund, or an Exchange Traded Fund (ETF), and why should the average investor care about them?
Take your average mutual fund. Perhaps it covers a specific sector, like biotech, or small-cap (capitalization) stocks. The fund manager had a great year last year, beating the market. That does not mean that the fund manager will have a great year this year, or ever again. The fund manager will buy and sell a lot of stocks during the year; the turnover may reach 100 percent. Each of those transactions means a fee that will be assessed to you, the investor. Even if the fee is only a fraction of a percent per transaction, it will add up over the year. In the past, it was possible for an investor to gain that vital bit of information allowing him to beat everyone else, and get in on the next Apple or Microsoft, before everyone else. That is not possible any more. The rules state that any information that can benefit one investor has to be made available to all investors at the same time.
The average index fund deals with a much broader part of the market, like the S&P (Standard and Poor's) 500. The fund manager buys shares in many, or all, of those 500 companies, and just holds them. The yearly turnover in stocks is closer to 10 percent, which means much lower fees for the investor. Year after year, index funds do a much better job of beating the market than the average active investor fund. There are tax advantages to index funds. The investor does not have to worry about why the fund has not bought shares in this or that hot new stock, so they can focus on their overall investment goals. Index investing may not be "sexy" or "exciting." but which is more important, excitement or profit?
For those who know their way around the investment world, this is a very interesting book. Maybe it is worth moving a small part of your portfolio into an index fund, especially if you are a conservative investor, and see what happens. Regardless, this book is well worth reading.
Take your average mutual fund. Perhaps it covers a specific sector, like biotech, or small-cap (capitalization) stocks. The fund manager had a great year last year, beating the market. That does not mean that the fund manager will have a great year this year, or ever again. The fund manager will buy and sell a lot of stocks during the year; the turnover may reach 100 percent. Each of those transactions means a fee that will be assessed to you, the investor. Even if the fee is only a fraction of a percent per transaction, it will add up over the year. In the past, it was possible for an investor to gain that vital bit of information allowing him to beat everyone else, and get in on the next Apple or Microsoft, before everyone else. That is not possible any more. The rules state that any information that can benefit one investor has to be made available to all investors at the same time.
The average index fund deals with a much broader part of the market, like the S&P (Standard and Poor's) 500. The fund manager buys shares in many, or all, of those 500 companies, and just holds them. The yearly turnover in stocks is closer to 10 percent, which means much lower fees for the investor. Year after year, index funds do a much better job of beating the market than the average active investor fund. There are tax advantages to index funds. The investor does not have to worry about why the fund has not bought shares in this or that hot new stock, so they can focus on their overall investment goals. Index investing may not be "sexy" or "exciting." but which is more important, excitement or profit?
For those who know their way around the investment world, this is a very interesting book. Maybe it is worth moving a small part of your portfolio into an index fund, especially if you are a conservative investor, and see what happens. Regardless, this book is well worth reading.
Displaying 1 of 1 review