He’s even quoted in the Intelligent Investor (Graham) as one of the guys in the late 90s saying that tech stocks were the only ones that were relevant and guys like Buffet were past their prime. I have found his advice to consistently lag the market and sound like a recycled version of whatever the most traders are currently saying.

Best Wishes,
D4L

W. E. Buffett – 1993

I disagree. In many cases you can accomplish exactly the same thing with an even lower-cost ETF. So, there may be a better option than a low-cost index fund. To some degree it depends on your individual circumstances.

In the financial world, you can bet that once the herd starts doing something, it’s time to bet against it. Housing reached a peak last year or so, and has a lot further to fall. Index funds are just a representation of the overall market, and it’s going to take a pounding for the next few years. You are better off putting your money into an inverse fund (goes up when the market goes down) for a while.

To the guy that listens to Jim Cramer: You are better off putting your money in a big pile and setting it on fire instead of listening to that guy. At least that way you would be warm for a while. Go look at Cramer’s “Stock Picks for a New Millenium” back in 2/29/2000:

724 Solutions – SVNX
Ariba – ARBA
Digital Island – ISLD
Exodus – EXDS
InfoSpace.com INSP
Inktomi – INKT
Mercury Interactive – MERQ
Sonera – SNRA
VeriSign – VRSN
Veritas Software – VRTS

Most of those companies are bankrupt, and if you bought them, you would have about a 98% loss today. The only reason I would listen to Jim Cramer is to hear what NOT to do.

“In the short term, free floating… will not fully dissipate inflationary pressure, although it would significantly do so,” Greenspan told an investment conference in Jeddah.

Still, “Gulf governments should consider the implication of such a move in the long term,” Greenspan said of the idea of floating their currencies.
Mr. Alan Greenspan is a soaked in economy of the West where this has failed. Dr. Bernanke is trying to balance the budget that was left in shambles. Alan and Bernanke have the two roads totally separate. One is micro the other is macro economist. There is vast difference in the two cannon of economy. Alan as son as he left the office started writing a book Greenspan, A., The Age of Turbulence, 2007. AMERICA’s elder statesman of finance, Alan Greenspan, has shaken the White House by declaring that the prime motive for the war in Iraq was oil. He currently works as a private advisor, making speeches and providing consulting for firms through his company, Greenspan Associates LLC. monetary policy, and viewed by others as overly supportive of the policies of President George W. Bush, as well as for policies seen as leading to a housing bubble.
Now with this trying to sell the book for cash and his talk of oil after he left the office is worth thinking about. Many economists and politicians wave a magic wand to us then when their time is up, we are holding an empty bag.
The Lies of Alan Greenspan http://www.thenation.com/blogs/notion?pid=233482
Until now. The economic consequences of his rule are accumulating and even the dullest financial reporters are stumbling on crumbs of truth about Greenspan’s legendary reign. It sowed profound and dangerous imbalances in the US economy. That’s what happens when government power tips the balance in favor of capital over labor, favoring super-rich over middle class and poor, then holds it there for nearly a generation.
He is in the Middle East
I thank you
Firozali A. Mulla MBA PhD
P.O.Box 6044
Dar-Es-Salaam
Tanzania
East Africa

If you are afraid of the S&P 500 index fund there are other domestic funds that focus on the entire domestic market and total world funds (domestic and international markets). You can’t get much more diversified than that. I disagree with the person who said that the large blue chippers that make up the S&P 500 will be going down over the next 20 years. The dividends alone will make them outperform smaller companies in a recession.

Index funds are not well diversified — especially the Vanguard 500 because it is weighted by large caps and high P/E stocks. If you want to lose money over the next 10-20 years, put everything you have in these funds. This advice seems to be a common myth that is extremely prevalent amongst the PF blog crowd and is quite disturbing. It would be nice to think that thought about investing is not necessary and mindlessly investing in an index fund is a panacea. I would advise that people do a bit more research into investing and balance the advice that Trent provides by also reading books by John Mauldin and Ed Easterling who provide a different perspective.

I read an Australian book (great basic read) and uses just the principles of Index funds and compounding over time to invest a dollar a day for your children from birth (or whenever the idea strikes you!)….author Ashley Ormond, “How to give your kids $1 million each!”, publisher Wright books. Uses Australian laws/tax etc but the principle remains the same whatever the landscape.

Index funds are just gathering momentum in Australia – we are buying our first large parcel shortly.

Yay Trent on your fabulous news – just wonderful. If you are after ideas to stockpile entries, I would love to read more on giving children moneysense and providing them with marketing immunity and using different vehicles to save for children’s education. One other area we are finding a stretch is looking after older dependant relatives – as parents age and need care etc at home, with family or somewhere else – how to think about these costs.

Hope your new lifestyle is everything you dreamt it would be. I’m of the school that socialisation for very young children is a cruel marketing ploy to get women back out into the workforce earlier – brain and ego development is such that they don’t really want to or need to ‘engage’ with other children until they are fourish onwards. Their little worlds necessarily start and stop with themselves. Next time you are at the daycare centre, maybe have a look at just how many of the children are actually interacting WITH each other rather than sitting in a small group doing their OWN thing. Too soon they will be at school every day, there are only a few handfuls of precious months before that happens, make the most of it now that you can is my advice.

Lorraine

IMHO, a well allocated portfolio of index fund investments can get you through those “long down trends or sideways moves” that Ron@TheWisdomJournal mentioned above. And regarding the “herd mentality”, although index funds may be commonly recommended, most of investors apparently are not following this advice. There is over $10 TRILLION invested in mutual funds and the majority of that is going into ACTIVELY managed funds, not passive index funds.

When it comes to index fund suggestions, a few of my personal favorites come from Paul Farrell, who tracks a number of “lazy portfolios” made of index funds on Marketwatch.com and Paul Merriman’s recommendations on FundAdvice.com. FundAdvice also has some fantastic articles and tons of stats, which is great for number-crunchers like me!

Everyone needs to keep in mind that the markets (and by default index funds) have, at certain times in history, had very long down trends or sideways moves. Many professionals believe we are entering one of those trends.

That’s why I invest in individual stocks and ETF’s. I don’t just buy stocks, I buy businesses afther thorough research. And don’t tell me you don’t have time. We’re talking about your financial future.

Index funds just make the most sense in the long run. I’m perfectly happy with market returns.