I think the key thing for individual investors is to figure out what style of investing they want their portfolio to reflect, and then figure out how to get help to make that happen, as opposed to doing it themselves. I’m always struck by the fact that people don’t do surgery themselves, or do their own legal or dental work. Most people don’t fix their own cars. Yet many people seem to think they can do their own investing.

Howard Marks, Author of The Most Important Thing

Howard, I have news for you. When I get a surgery or legal work done, I have a reasonable belief that it will be done correctly. Not so with financial advisors. Look at your track record. Prove it.

Most managed mutual funds don’t beat the S&P 500. Read Burton Malkiel’s A Random Walk Down Wall Street. Not so confident now, are you? Then read The Quants by Scott Patterson. Ahh, perhaps “alpha” does exist. But guys like that aren’t financial advisors. They’re the people who make millions off of well-intentioned but inept financial advisors.

Thanks, but I’ll stick to the index funds.

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  • Morgan Jassen June 22, 2016 at 7:08 pm

    Derek, Thanks for writing this, I enjoyed reading it. This is the first I heard of Burton Malkiel’s A Random Walk Down Wall Street. I went and read the synopsis. Seems like one thing the author / book recommends that there’s not a way to Beat the system — that the best long-term bet is to invest in solid strong-performing stocks and don’t try to buy and sell quickly based on market predictions. I’m really started to get interested in starting to learn more about investing, so for me it was a pleasure to read this and to learn about this perspective.