Quote:
Originally Posted by masraum
For me, 5 years does not demonstrate long term, consistent results. Five years is a blip. I think about long term as being 20, 30 or 40 years. Lots of funds can beat the market in short periods here and there. If those funds are beating the market long term, then, yeah, they may be worth the premium. But, if they beat the market like a red-headed stepchild for 5 years, and then drop down to a normal level for a few years, and then drop below the market for a few years, you aren't making money unless you sold them before they dropped, and you're still paying the expert his high fees.
I have a hard time paying the experts high fees when pretty much everything that I've read indicates that over the long term, active investing doesn't beat the market, especially when you factor in the costs.
How the mutual fund graveyard can hurt investors - CBS News |
Okay, 5 years isn't enough...I can see that. What if I gave you the symbols of funds that beat the S & P over the past 20 years, 40 years, 60 years or even 80 years (and I can)? Then why would you take the index over those managed funds?
I get the entire fee thing but we are talking rates of return after fees. If over 40 years managed fund XYZ after fees has beat the index why does it make more sense to invest new money in the index?
Maybe I'm not seeing it but if for 30 years car A has been going around the track faster than car B why would I bet money on car B? It seems like it would be a mistake to bet on the car that has a worse historical track record.