Ketawa wrote:These issues have been discussed many times before on the forum. These Vanguard funds switched from S&P to MSCI indexes in May 2003... discrepancy in performance...
As they used to say, "you can't buy an index." You have to use some actual flesh-and-blood real-world mutual fund, and the results you get are not what some academician's spreadsheet shows, it's what the actual mutual fund really does. When the theory doesn't show up, whether it be a theory about gold or dividend stocks or small-cap value, there's always an alibi:
"O, you looked at the wrong dates
"O, you looked at the wrong fund
"O, Vanguard sux. Stinky Vanguard!"
"No, no, don't look at your own
it, look over here
, look at the mutual fund I've
picked between the dates I've
picked. See? See?"
Does this mean the academics are wrong? No. It just means they're using powerful techniques to find weak effects, and the stuff is tenuous
. If an effect can't even survive a change of index provider
, that's a weak effect.
(And it also tells you that nobody agrees on the definition of terms like "small growth" or "small value" stock, opening up the possibility of further alibis, "the small value stocks you
looked at shouldn't really count as small value.")
Can anyone know for sure whether Wellington Fund is better or worse than LifeStrategy Conservative Growth? I doubt it. Can anyone tell whether an exquisitely mixed gourmet recipe of DFA funds is better or worse than a meat-and-two-veg blue-plate special three-fund portfolio? I doubt it.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.