Active vs. Passive: a Vanguard perspective

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RudyS
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Active vs. Passive: a Vanguard perspective

Post by RudyS »

This links to a blog from Market Realist, however, it seems Vanguard has "sponsored" this post. But quite interesting.
https://beta.marketrealist.com/2017/10/ ... edium=auto
RadAudit
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Location: Second star on the right and straight on 'til morning

Re: Active vs. Passive: a Vanguard perspective

Post by RadAudit »

Since a truly passive approach to investing would resemble the orange horizontal line slightly below zero (represented by Vanguard Total Stock Market Index Fund), this suggests index-fund investors have been building active portfolios.
So, apparently, some investors are chasing increased returns by trading in and out of certain index funds. Guessed they missed the part about buy, hold and rebalance, and stay the course.
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
avalpert
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Re: Active vs. Passive: a Vanguard perspective

Post by avalpert »

This is the old boiler plate argument - equivocating on the term 'active' so it can conflate 'actively' choosing an asset allocation with 'actively' selecting securities. The premise is false, there is no reason we would expect 'passive investors' to use all indexes and ETFs in their total market weights.
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Majormajor78
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Re: Active vs. Passive: a Vanguard perspective

Post by Majormajor78 »

I tilt to small value myself. Even though I haven't deviated from my IPS in seven years I guess I'm an active investor then. Oh well, now that the glamour has been cast aside I guess I'll just pack it in and buy some load funds instead.

A little more seriously, if anything this article is damning of financial planners actively managing accounts. I'm under the impression that the majority of trading of ETF's during the day are planners and robo advisors trying to beat the market. The fact that they underperform does nothing but validate the buy and hold methodology.
"Oh, M. le Comte, it is only a loss of money which I have sustained... nothing worth mentioning, I assure you."
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