1) Active Investing Is Worse Than Objectivism
(that's a riff off the title of the polemic mentioned by RocketShipTech, above, by one Inigo Fraser-Jenkins)
Whoa! In every other
aspect of my financial life, these folks tell me the highest, most ethical, and most moral conduct is to act purely in my own financial self-interest. But when it comes to choosing a mutual fund, they tell me that I should quit being a slacker and free-riding off the virtuous risk-taking of others. Instead of choosing the mutual fund that will--in my judgement, knowing my own abilities--make me the most money, they want to shame me into altruism. They tell me to recognize a moral duty, for the good of the investing community, to give up a little in the interest financing the worthy endeavor of price discovery. Possibly by paying people like Fugetta to do it for me.
No thank you, I will do what's best for me, and as for "what would happen if everybody indexes" I will cross that bridge when I come to it, because in my opinion it ain't gonna happen.
2) Price Tags are Acceptable
In the 1870s, John Wanamaker, for the first time in recorded human history put price tags on the items in his department stores. Shoppers, rather than being price makers engaged in active price discovery, became passive price takers. In almost every field of consumer purchase but car buying, passive price taking based on price tags and advertised prices was the norm in the US for well over a century, and I can't remember anyone trying to shame me into doing my duty and haggle prices with the grocery checkout cashier.
3) I Cannot Pick Stocks and I Cannot Pick Stockpickers
I refuse to be flattered into thinking that I do. I
do not have any valuable insights into price discovery of stocks. I've touched and felt the wonderful quality of L'Eggs hosiery, but that does not
give me an edge over the armies of soulless people with green eyeshades reading balance sheets by gaslight. I would just add noise to the market and make it less
No, thank you, I
have no ability to pick stocks, nor to pick stock-pickers, nor do I have any moral or ethical duty to try.
P.S. if, after reading... OK, skimming... over that long screed by Massimo Fuggetta, I found that I was becoming convinced, I'd just buy BRK.B stock. I doubt that would satisfy Fuggetta.
P.P.S. Larry Swedroe took on The Super Investors of Graham and Doddsville
, looking at the two of them that manage mutual funds, and found that "Perhaps, like Buffett, these super investors have been burdened by the huge amount of assets under management. Or perhaps the markets have become more efficient over time. However you want to look at it, the super investors of Graham and Doddsville have been anything but super for at least the past 15 years." And that was before
the Sequoia Fund's -30% loss in 8/2015-6/2016.
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.