For those familiar with Lars Kroijer and his views
Comments
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Once you give up the idea of “having and edge” and trying to find funds or stocks to make you a quick profit you will be able to relax and let general economic growth and compounding meet your financial goals.“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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bostonerimus wrote: »Once you give up the idea of “having an edge” and trying to find funds or stocks to make you a quick profit you will be able to relax and let general economic growth and compounding meet your financial goals.
I agree as far as this statement goes but would go further..... If you need to rely on "The Edge" or come to that a fraction of a % in charges (which tends to be discussed in terms of an Edge) to achieve your objectives you must be taking a high risk of failure. Failure matters in investing, if you dont care about it you are playing or perhaps gambling rather than seriously facing the problems of investing.
What the statement omits is managing risk, a subject of at least equal importance to performance. That is why I go for active funds that can offer very different asset allocations to the standard market cap based index trackers.0 -
I agree with you if you mean managing volatility. However I think for most people, especially inexperienced investors, a passive approach is less risky than trying to select and manage a portfolio of active funds.I agree as far as this statement goes but would go further..... If you need to rely on "The Edge" or come to that a fraction of a % in charges (which tends to be discussed in terms of an Edge) to achieve your objectives you must be taking a high risk of failure. Failure matters in investing, if you dont care about it you are playing or perhaps gambling rather than seriously facing the problems of investing.
What the statement omits is managing risk, a subject of at least equal importance to performance. That is why I go for active funds that can offer very different asset allocations to the standard market cap based index trackers.0 -
I agree as far as this statement goes but would go further..... If you need to rely on "The Edge" or come to that a fraction of a % in charges (which tends to be discussed in terms of an Edge) to achieve your objectives you must be taking a high risk of failure. Failure matters in investing, if you dont care about it you are playing or perhaps gambling rather than seriously facing the problems of investing.
What the statement omits is managing risk, a subject of at least equal importance to performance. That is why I go for active funds that can offer very different asset allocations to the standard market cap based index trackers.
I don’t outsource risk management to fund managers, I do that myself in my asset allocation. I see that as just another un-needed layer“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
If you need to rely on "The Edge" or come to that a fraction of a % in charges (which tends to be discussed in terms of an Edge) to achieve your objectives you must be taking a high risk of failure.
Although we talk about small fee differences I don't think anyone has suggested fees will make or break their retirement, etc plans. The difference will however compound up over the years and could easily make a 10%+ difference in the outcome. If someone is paying crazy SJP levels of fees it can be the difference between real growth and treading water to inflation.
Alex0 -
quirkydeptless wrote: »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.
I thought I was the only one 100% active. I picked my funds wisely and have been suitably rewarded.0 -
THAT is the guy!! The other book that i'd read that i said had taken a similar stance to Lars Kroijer (as far as i've read Kroijer's book) - that was the author.Tim Hale is the other obvious source.
Exactly why i'm in agreement with their viewpoint. I'm not saying their viewpoint is the only one to have and it applies to all because clearly it doesn't.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.
But it certainly does with me. I just don't know enough, nowhere near enough, to say that i know better.
Congratulations to youI thought I was the only one 100% active. I picked my funds wisely and have been suitably rewarded.
I hope your fortune continues. 0 -
bostonerimus wrote: »I don’t outsource risk management to fund managers, I do that myself in my asset allocation. I see that as just another un-needed layer
I thought you used trackers and government bond funds. These provide one with minimal asset allocation control. The only levers you have are the % equity vs safe bonds and I guess US vs "International" equity. There is far more to asset allocation than this. I am interested in asset allocation in the context of (a partial list):
- managing correlation in capital performance
- managing correlation of income sources
- increasing diversification by choice of %s of large and small companies
- increasing diversification by use of other investment areas such as infrastructure and property
- increasing diversification by use of different types of bond
- avoidance of over-dependence on individual sectors or geographies
It all depends on your objectives. If you have no actual need for your investments other than for use in an emergency and to bequeath to your children then it may not make sense to go to this level of detail other than out of interest. But then it doesnt matter much what you do as long as it isnt stupid.
On the other hand if you want a high secure income over an extended time period whilst leaving sufficient for long term care I feel it is very worthwhile.0 -
Although we talk about small fee differences I don't think anyone has suggested fees will make or break their retirement, etc plans. The difference will however compound up over the years and could easily make a 10%+ difference in the outcome. If someone is paying crazy SJP levels of fees it can be the difference between real growth and treading water to inflation.
Alex
Yes but, for example, the choice of VLS100 vs a FTSE World tracker made a difference of 15% in 5 years, far greater than the effect of most fees, SJP excepted. Since both funds invest following the same approach in much the same universe of companies this difference arises from asset allocation. Yet many people here focus on the fees.0 -
Yes but, for example, the choice of VLS100 vs a FTSE World tracker made a difference of 15% in 5 years, far greater than the effect of most fees, SJP excepted.
Sure but we talk about that too in the endless UK bias, UK isn't industry diversified, are UK dividends sustainable, is UK a value option, UK is doomed under BoJo/Corbyn, should I invest with Brexit happening, etc threads.0
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