Index Trackers Are So Widely Recommended..... But...?

capital0ne

quirkydeptless wrote: »

Not all of the haystacks have needles in them

That's the point, they do! Every haystack has needle, it may be rusty blunt needle but there is one, so you need to pick a haystack that suits your investment needs!

capital0ne

In reality no one can predict, take a guess, or work out where any share price is going, which is why active funds or IT's are a waste of time, thus the index tracker.

No one on this site or any fund manager or (I)FA can say you should invest in xyz company/fund/it - it's meaningless and just lines the the advisor's pockets

Going down a index tracker - passive route is the only guaranteed way to grow your investment portfolio.

Anything else will not work - just look at the people who piled int Neil Woodford funds, he's had a lucky streak and based on that was recommended by H&L amongst others - not so smart now.

No professional will recommend an index based portfolio because there's nothing in it for them.

Then there's complexity - we all get fooled into thinking that a report by a professional (or anyone on this site - except me of course) that shows a dozen different funds/shares that have been 'hand picked' to suit your objectives must be good and worth 4-5% fee and an annual fee of say 1%.

Compare that to say three funds, Global tracker, UK tracker and a Global bond tracker which will beat any professional hands down over the long term, especially as the fees will be so low they won't erode your pot.

Good luck folks

(Note: All selling mistakes are the fault of my keyboard - not me!)

grnglide

In reality no one can predict, take a guess, or work out where any share price is going,

So who is going to explain this to Warren Buffet and suchlike?

Prism

capital0ne wrote: »

Compare that to say three funds, Global tracker, UK tracker and a Global bond tracker which will beat any professional hands down over the long term, especially as the fees will be so low they won't erode your pot.

Well I disagree, but of course I would since I use mostly active funds for equities. I do have a passive global bond fund though.

capital0ne

grnglide wrote: »

So who is going to explain this to Warren Buffet and suchlike?

You have a point, any volunteers!

P.S. Don't remind him of his $2.6bn loss on IBM in 2016
Or his $1bn hit in 2015 :T

newatc

I suspect many people choose trackers not because they will be the best but because they will be average, low cost and low maintenance.

bostonerimus

capital0ne wrote: »

Anything else will not work - just look at the people who piled int Neil Woodford funds, he's had a lucky streak and based on that was recommended by H&L amongst others - not so smart now.
)

I can’t agree with this. There will be plenty of active non index portfolios that will “work”. The thing is there will be those that fail too. Nothing is certain and to develop a robust plan probability of various outcomes must be considered. The advantage of index investing is that it makes planning easier and maximizes the probability of financial success rather than maximizing the potential size of your pot.

Thrugelmir

capital0ne wrote: »

You have a point, any volunteers!

P.S. Don't remind him of his $2.6bn loss on IBM in 2016
Or his $1bn hit in 2015 :T

Didn't realise that Buffett ran a single share portfolio. :cool:

When everybody invests in global index trackers who is going to set the market price of the underlying shares? Active investing will come back into fashion. Fads are cyclical. Every new generation believes they've found the Holy Grail of investing success. Until an unexpected event dispels the myth.

Davy_Jones_II

The price is set at the margins, you only need a handful of people fully analyzing a stock to push it to the rational price.

Yes, if there are none then the price becomes meaningless, but if ten out of a million do their research then the market will still clear at the “right” price most of the time.

Thrugelmir

Davy_Jones_II wrote: »

The price is set at the margins, you only need a handful of people fully analyzing a stock to push it to the rational price.

Yes, if there are none then the price becomes meaningless, but if ten out of a million do their research then the market will still clear at the “right” price most of the time.

Might work well for the US markets not so for the far less researched ones. Which was the premise for Jack Bogle's concept.