Active managers of mutual funds want investors to stop their massive move to index funds. Anytime the S&P 500 outpaces actively managed funds, experts suggest that actively managed funds should start doing better. They fail to mention that their suggestion to move to actively managed funds is a market timing recommendation. In the next breath they say they don't believe in market timing. One thing that makes index investing so effective is that investors no longer have to play the game of "where should I move next?" Listen and learn what this can mean for you.
Recent headlines at morningstar.com herald their "Fund Managers of the Year for 2012". As is often the case, these managers are those richly rewarded for their past performance. We all know we can't buy the past, but it doesn't stop investors from hoping the past is prologue. Paul discusses the performance of the hottest of the funds, Virtus Emerging Markets Opportunities Fund. The good news is the fund made lots of money. The bad news is it was much riskier and more expensive than competing index funds. In fact, many of the index funds actually beat Virtus' short and long-term track record. As always, Paul tries to get investors to look behind the hype and focus on the numbers so as to act in your own best interest.
Do active fund managers really make more money for their clients? Paul provides historical examples and suggests Indexes and asset classes that can provide you higher, safer returns.
importance of understanding risk, historical probabilities, expected returns and the psychological implications of constantly second guessing a strategy. Paul also shares the story of “investor Hell” that he went through in the late 1990s.