ETF The war on indexing continues...?

found this exchange highly amusing....

 

Silly to get into these argument, each strategy has its pro and cons and there are millions of investors with different ideas, ways to make money and that what makes the market.

each obviously has their preferences and they obviously advocates their way but it not the only way for everyone, Roger make money picking share he aren't going to spruik ETF and ETF guys make money by simply tracking the index and nothing else and he aren't going to spruik picking stocks

properties vs shares, technical vs fundamental, passive vs active I mean the list can go on and on, best ways is to read up on them all and make your own system so your capital is protected, you sleep well at night and it give you a regular income

 

Go ahead, make my day:

 

The funny part is, the active managers who are so against index ETFs and think it’s a big bubble waiting to pop should stop wasting their time and simply sit back, do their own thing and wait....and wait...and wait...for it to somehow unravel for the ultimate “I told you so”

But I guess they need to do something to stop outflows!

 

I don't take any notice of the views of RM.

It'll never happen but in my utopian view of the world it'd be great if there was a disclaimer along the lines of "I'm talking my own book here."

 

How @Nodrog was convinced to get some VGS

 

Roger Montgomery .... Hmmmmmmm........

 

For me benchmark has been set by Buffett. And I am not talking about returns here. I am talking about putting shareholder's interest above everything else.

By that I mean. Any active manager or even LICs needs to demonstrate the below

1) Each year show your returns against low cost diversified index from the time of inception of the fund. Just focusing on last 3 or 5 or 10 years is not showing full picture. Luck could have played big role in your returns during that period for all I know. Berkshire's annual report shows the growth in book value against S&P500 for each and every year since the beginning.

2) Any fund manager that tries to justify running many funds for different investor types (for eg. income fund, growth fund, overseas and/or asia exposure, sector specific etc) doesn't sit well with me. Run the one fund with focus on total returns. How you achieve that is upto you. To me purpose of running many funds is to increase fees in the name of catering to different investor's needs. I like to see them have total focus on the one fund they run. Bit like Put All Your Eggs in One Basket, and Then Watch That Basket. I have yet to meet anyone who invested in Berkshire stock over the long term and complains about their decisions to not pay dividend.

3) Obvious one is fees. Even if you keep beating the index but charge higher fee eventually it will cost the investor because one or two things will happen. Either funds under management will grow to a size where earlier advantage of being small disappears and/or the risks you take to outperform is significantly higher where one mistake and losses can wipe out all outperformance to date and now you are stuck with a fund that charges you higher fees and returns are at best similar to index.

4) Skin in the game. Have majority of their wealth invested in the fund they are running.

It's extremely difficult to find active funds that tick the above 4 boxes. So indexing wins for me hands down.

Cheers,
Oracle.

 

you can get around that by investing with our local or oversea billionaire business, I have not lose a dim investing in their business, in-fact the grow rate in these business overtime is far superior to any other market return by a very large margin

close to certain to make you a lot of money over many business cycles.

I just wait for the right price during panics or financial collapse, margin call mayhem or some other major event and buy in and reap the rewards, other wise I do nothing with my cash.

My shopping list always has them on and a price I want to buy, when it hits I buy with my eyes close, when it get too hot I cash out some and repeat year in year out, easy as invest in ETF and LIC with superior return.

When an investment idea hit, my first criteria is is he the founder that has majority of his money in the business, the answer is yes then it a matter of checking other number and get ready to get rich with them, else Next ..

 

Posted on another thread but may be better here.

Building a portfolio around index funds isn’t really... at QuoteTab

 

So how do you get your hands on the RM white paper so something meaningful could be contributed to this thread without having to sign up and put your details into their marketing machine?

The anti ETF argument has about as much wide spread support and legitimacy as climate science denial or the smoking / asbestos lobby back in their day. (and the thing that really gets up my nose is that RM would know it)

Without reading the paper I’m guessing just another example of fear mongering click bait designed to get you into their marketing juggernaut, so they can work to convince you that you "need" their expensive actively managed funds or secret sauce valuation software that has zero robust evidence that it will add any value whatsoever.

 

Well said.

Guess that’s why most of us just see it mentioned, smile and then move on to other things (like drinking)

 

It turns out all you have to do is provide an email address that appears valid (even if it isn't) and the whitepaper becomes available. Whether it's a worthwhile exercise or not is another question

 

@dunno we all here at PC demand your return

 

Maybe he’s busy writing the rebuttal to RM

 

Let me think about that for a sec.


Nope!

 

Ok here’s a beer for ya, will a few more of these get you back?

 

So Rogs points as I understand them ;

- the market is in a bubble, lead by tech stocks
- inflows drive the bubble higher
- cap weight ETFs buy the index
- Please invest with me and ignore my ongoing underperformance, I’ll come good I swear..just wait.

And some nonsensical comparison of CDOs with nothing backing them with Full replication index funds. Ludicrous.

It’s all pretty bizarre, the outcome is the same as punters piling into index huggers as in the past, but less fees to managers, like Rog.

 

What surprises me the most is that anyone here actually bothered reading this sort of rubbish especially knowing who the author is.