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For those familiar with Lars Kroijer and his views

edited 30 November -1 at 1:00AM in Savings & Investments
101 replies 6.2K views
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  • edited 12 August 2019 at 6:47AM
    quirkydeptlessquirkydeptless Forumite
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    edited 12 August 2019 at 6:47AM
    I'm familiar with Lars Kroijer and his views (watched the vids, but not read the book) and I'm also a regular reader of Monevator and his championing of passive investing.

    I also accept I have no edge, don't work in the financial industry, and have never consulted a financial advisor about investing.

    I'm also one of those people that owned up to having 100% active investments in that thread

    :think: :think: :think: :huh:

    Active or passive? Opinion is divided on the matter

    https://www.youtube.com/watch?v=bIXQFaEsvlQ

    I should really go passive I guess, but habit's hard to break and my 30 years of investing by handing money over to edgeless active managers hasn't been so bad, and still got me to a point of contemplating retirement.
    This is not investment advice.
    Your money may go "down and up and down and up and down and up and down ... down and up and down and up and down and up and down ... I got all tricked up and came up to this thing, lookin' so fire hot, a twenty out of ten..."
  • MalthusianMalthusian Forumite
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    Which brings me here. From reading in these forums, i could be wrong but it appears that the majority and not the minority believe they have an edge, certainly amongst the regular posters and it makes me wonder - why is that.

    What gives you that idea? Genuine question. Asked a generic "where should I invest" question, the majority of regular posters here will generally recommend index-tracking funds (Vanguard etc) which implies they don't think they have an edge.

    On a share trading forum you would get a different response, but this forum is called Money Saving Expert and most of us believe in rule no. 1 of investing, which is "Don't lose money".

    Outside of this forum, I don't think the majority of people think they have an edge either. Most people have never thought about it - they have no clue what an edge is and whether they have one or not.

    The biggest flow of money into actively managed funds (i.e. people who think they have an edge) is not from people who have researched the fund manager's track record and believe in their inherent stockpicking ability, but the low-knowledge DIY segment and the vertically integrated advice segment. I am talking about people who invest with St James Place, or, with Hargreaves Lansdown and end up with the default multi-manager solution or the Wealth 50.

    They are not being offered active management because they believe they have an edge, or because the fund manager / wealth manager has an edge, but because it is the most efficient means to extract their money.
    I think this is the point someone on here steps in and says absolutely everything is managed anyway.
    "There is no such thing as 100% passive" is an argument in the same grab bag as "What is reality?" Even they know there is such a thing as passive and what it means.

    I do hold some active funds where an index-tracking approach is either impractical or undesirable - e.g. commercial property and smaller companies. Passive fund management is not a dogma but a means to an end, and when it no longer makes sense you stop using it.
  • JustAnotherSaverJustAnotherSaver Forumite
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    Malthusian wrote: »
    What gives you that idea? Genuine question. Asked a generic "where should I invest" question, the majority of regular posters here will generally recommend index-tracking funds (Vanguard etc) which implies they don't think they have an edge.
    Just what i feel from reading other peoples posts.
    There'll be those who are quite cryptic in their answers, like they're being interrogated by the police & they don't want to rat on their buddy, but once you get past all that and actual answers start coming in (or at least the ones that i've seen) - they seem to be actively managed.



    I've not ran any tally and done proper research but that's just the feel i get from reading the posts. That thread that was linked to earlier in this thread, people were listing off actively managed more than not.


    Maybe the people on this board or at least this section of the board are smarter than your average Joe, especially when it comes to investment. I don't know. I'd say (the regulars at least) appear smarter than the circles i move in which is why i come here for info a lot. If i knew anyone in person where i could get this information/advice from then i'd do it.

    Outside of this forum, I don't think the majority of people think they have an edge either. Most people have never thought about it - they have no clue what an edge is and whether they have one or not.
    Agreed.

    I think we're all very 'aware' on this forum. Even people like myself and the very small percentage of people on here who know less than I do - they're still 'aware', but your average Joe on the street isn't so they just put their money where their mate said they put theirs because they got a good return last year kind of thing. They refer to buying a new car as an 'investment' when it's anything but. They know of ISAs but nothing of the varying types.



    Talking to people at my work it's incredible how little people know. Me to them is like the regulars on here to me. It's scary.


    "There is no such thing as 100% passive" is an argument in the same grab bag as "What is reality?" Even they know there is such a thing as passive and what it means.
    See, without naming names, there's a person or persons on here who appear to challenge such statements. They answer questions with questions. Forget trying to get a straight answer.

    I remember one time i did mention what i'd read - about the whole passive & active thing. They flipped it on me that basically nothing is passive because it's managed in some way, somethingorother.


    Me as a know-nothing started wondering what is this Matrix nonsense i've just gotten involved in. What is the meaning of life and is reality even real?
    That's when one or two others stepped in and pulled the poster on the awkwardness of their post and basically how they knew what was meant kind of thing.
    And that's the issue - i don't know enough to challenge these views so when they say nothing is passive and it's all managed i start thinking well this book just lied to me because this guy must be right, right?


    Now i'm not saying this person is unhelpful or helpful, that i agree or disagree with them. It is what it is at the end of the day. That sort of posting knocks any ounce of confidence a know-nothing thought they'd built but hey ho, that's life.

  • AlexlandAlexland Forumite
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    I do sometimes wonder at how much time we spend on this forum talking about what is mostly an already solved problem. If someone considers their objectives, takes a sensible asset allocation, accepts some volatility, keeps their fees low and makes sufficient contributions then over the medium to long term they stand a very good chance of success.
  • PrismPrism Forumite
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    And that's the issue - i don't know enough to challenge these views so when they say nothing is passive and it's all managed i start thinking well this book just lied to me because this guy must be right, right?.

    A few years back my pension looked a bit like
    x% multi-asset fund
    x% tech index
    x% health index
    x% global bond index
    x% US index

    All of these were passive funds but I selected them (from many options) and also decided the % splits. I don't know the answer to this myself, but was I a passive or active investor back then? Thats why there is some debate about the term passive.
  • EdSwippetEdSwippet Forumite
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    I've not ran any tally and done proper research but that's just the feel i get from reading the posts. That thread that was linked to earlier in this thread, people were listing off actively managed more than not.
    One possibility is sampling bias. Perhaps this site simply attracts people who use actively managed funds more than those that use passively managed ones. That doesn't mean they have any 'edge', just that they're drawn to sites that discuss investing, like moths to a flame.

    If you accept passive investing as your way forwards, there just isn't much to discuss after that. Whereas active investing adherents can (and do!) discuss endlessly the relative merits of this fund or that. Most of this is heat, not light, but in terms of volume and by its very nature it easily overshadows any discussion of passive approaches.
    Maybe the people on this board or at least this section of the board are smarter than your average Joe, especially when it comes to investment.
    Mostly experience blended with showing off would be my guess. (Myself included -- see how I pompously referenced wikipedia on 'sampling bias' above? Google makes it very easy to appear smarter than you really are.)
    I remember one time i did mention what i'd read - about the whole passive & active thing. They flipped it on me that basically nothing is passive because it's managed in some way, somethingorother.
    They were just splitting hairs. They know as well as the rest of us that passive investing means holding a portfolio of funds that are themselves passively managed. It does not mean that every single individual decision in the chain has to be passive. That's a ridiculous stance to take -- not to mention an impractical one -- and anyone who argues otherwise knows that and is just being unnecessarily obtuse. Showing off. Ignore it. I do.
  • jim1999jim1999 Forumite
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    Tim Hale is the other obvious source.

    He makes the point, very convincingly, that in 99% of cases there is no "edge". What the newspapers attribute to great stockpicking is more than likely just luck. Whilst it is possible to find fund managers that have beaten the market, it is impossible to predict in advance who they will be. Look at Lindsell Train and Woodford for good examples of that. And of course everyone's a genius in hindsight.

    What I find amusing is that when active fund managers who have entire research teams working for them every day of the week, and direct access to board members and key City influencers cannot reliably beat the index, how on earth someone who spends an hour or two per evening reading financial pages and company accounts thinks they'll reliably beat the index.

    Obviously it isn't impossible. Buffett is one example of positive trends over a very long period of time. And I recall reading about a couple of quant-based hedge funds that were returning ridiculous amounts but effectively closed to new investment to avoid getting too big.

    What Hale advocates is spending your time thinking about what you're trying to achieve and matching your investments to that, which funnily enough is what introductory wealth management qualifications focus on. After all, it's all well and good buying a stock with a really great future, but if you're going to need to cash it in within 2 years then you are just gambling. Far too many people ignore the latter, hence the questions of "I have £30k, what should I invest in", when the amount you're investing is one of the least relevant bits of information.
  • bostonerimusbostonerimus Forumite
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    Alexland wrote: »
    I do sometimes wonder at how much time we spend on this forum talking about what is mostly an already solved problem. If someone considers their objectives, takes a sensible asset allocation, accepts some volatility, keeps their fees low and makes sufficient contributions then over the medium to long term they stand a very good chance of success.

    I agree. The principles of a sound financial plan are not complicated at all. They easily fit on the back of a single index card. However those simple principles are not necessarily easy to implement. It might be difficult to save and invest enough and it”s not always easy to do the right thing when you see your investments losing value.
    Misanthrope in search of similar for mutual loathing
  • MaxiRobriguezMaxiRobriguez Forumite
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    Whenever you read about an edge it's always a comparison made against individuals vs highly capitalised financial institutions with both parties trying to beat each other in a stock picking game. In such scenarios the individual never has the edge. However, that isn't always the typical scenario.

    There's many many millions of individual investors which are hoovered up by institutions in order to grow their AUM. Quality stock picking takes a backseat against encouraging their customers to buy anything and everything, and the majority of those customers will take the encouragement rather than question it, because the advice is coming from a 'reputable' financial institution.

    I don't think it's possible to get the correct stock picks time and time again but I do think it's possible with a bit of careful planning to avoid the worst of stock market sell-offs and also maintain a bit of cash to pick up the bargains when that does happen. A lot of people will quote "time in the market" but if the big boys genuinely believed that to be the case they wouldn't increase cash allocations in flexible portfolios ever.

    But I'm young and naive still so I'll let you know if was indeed possible in about 40 years.
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