CNBC Admits Passive has been beating active

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bogle2013
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Joined: Tue Jan 22, 2013 3:56 pm

CNBC Admits Passive has been beating active

Post by bogle2013 »

The last 5 years have been an anomoly I guess.. :)

http://www.cnbc.com/id/101143125
Because the rise in equities over the last five years has been indiscriminate, with all stocks reacting to the same news in the same way, it has been a bad time to try to beat the market by running an active fund, and a great time to run money passively, tied to an index. Those eschewing the market altogether have had a horrible time.
larryswedroe
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Re: CNBC Admits Passive has been beating active

Post by larryswedroe »

It never ceases to amaze me that the financial media writes things to back up their point that simply have NO BASIS IN REALITY.
The statement is the perfect example
Because the rise in equities over the last five years has been indiscriminate, with all stocks reacting to the same news in the same way, it has been a bad time to try to beat the market by running an active fund, and a great time to run money passively, tied to an index. Those eschewing the market altogether have had a horrible time.
Really,

http://www.cbsnews.com/8301-505123_162- ... ck-market/
and

http://www.cbsnews.com/8301-505123_162- ... ap-stocks/

And one can look at any year and you will find like data. There is always a wide dispersion of returns

Larry
The Wizard
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Re: CNBC Admits Passive has been beating active

Post by The Wizard »

Wide dispersion, yes.
I wonder what percentage of the S&P 500 stocks are owned within index funds, including Growth, Value, and Blend variants?
Attempted new signature...
larryswedroe
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Re: CNBC Admits Passive has been beating active

Post by larryswedroe »

wizard, probably in area of 30%
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Ged
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Re: CNBC Admits Passive has been beating active

Post by Ged »

Yet at the same time it's a stock pickers market.
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momar
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Re: CNBC Admits Passive has been beating active

Post by momar »

Ged wrote:Yet at the same time it's a stock pickers market.
Yep, just need to pick all of them.
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep
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steadyeddy
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Re: CNBC Admits Passive has been beating active

Post by steadyeddy »

I recently met a new acquaintance at work who said something like, "I only gamble the responsible way, with stocks." I said, "Gambling with my life savings is too much risk for me. I prefer index funds." His response was, "Index funds are without a doubt the best way to invest, but they're just so boring to watch."

I had to give him credit; it's a fair summary.
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