Debating which investing style, passive or active, is the superior method is unlikely to end soon. The research is too conflicting and exceptions still exist. The difference of opinion has a long and acrimonious history – and it continues to this day. Before we enter the debate and provide some opinions, it is important to […]
Index vs. Passive Investing
Harold R. Evensky, in his Wealth Management: The Financial Advisor’s Guide to Investing and Managing Client Assets book, makes a distinction between index and passive investing. The distinctions can be found at this location. Few readers are unaware of the differences between active and passive management, but the subtle definitions between index and passive management […]
Buffett vs. Steadman
For every Warren Buffet there are a hundred Charlie Steadman’s in the investing world. While nearly every investor has heard of Buffett, few remember Charlie Steadman. Is there a reason for this short memory? “Until he died at age 83 in 1997, Charlie Steadman burned through investors’ assets at a rate unseen in the fund […]
Retirement Planning Mistake #5
Investors pick individual stocks to build portfolios rather than use index funds. Our preference is to use commission free ETFs. Next to not following “The Golden Rule of Investing,” the error of not using index funds is likely the biggest mistake investors make. Remember – The Market is smarter than you are. While there are […]
Schrodinger Portfolio Review: 30 May 2014
Here we are at the end of May and the passively managed Schrodinger is up for review. We last purchased ETFs in March when shares of DBC, RWX, and VEA were added to the portfolio to bring several asset classes back into balance. Right now Commodities (DBC or DBA) is the only asset class running […]
On the Question of Benchmarks
In the Word file attached to Part 10-4 of the Feynman Portfolio Study I included some comments on “benchmarks” – which ones might be used (common index, appropriate Fund, customized index e.g. ITA Index…etc), what to expect when comparing portfolio performance to the selected “benchmark” and whether we should expect to “beat the index/market/benchmark”. For […]
Why I Use Index ETFs
Why I use Index Exchange Traded Funds (ETFs). Let me count the ways. Simplicity: It saves the work of stock analysis. Increases probability of success: A literature search of index investing vs. active stock picking will have the honest researcher coming down on the side of index instruments. The literature is replete with this information […]
Passive Investing Reduces Taxes In Taxable Accounts
Based on 2014 tax tables*, regardless of what tax bracket you are in, all short-term capital gains are taxed as income whereas long-term capital gains depends on your tax bracket. If you are in the 15% tax bracket, married taxpayers filing joint returns earning a combined income between $18,150 and 73,800 pay zero taxes on […]