SOMETHING FOR THE WEEKEND
One of the biggest challenges I face as an advocate of evidence-based investing is helping people to visualise just how much more they’re paying to invest in actively managed funds. Well, thanks to author Lars Kroijer, I now have a very striking image with which to shock investors out of their blissful ignorance.
Lars has worked out that, over a typical working lifetime, a train driver on the London Underground will shell out the equivalent of seven Porsche cars for active management over and above what they would pay if they invested in low-cost index funds instead.
Now, I’m not the least bit interested in fast and flashy cars — the equivalent for me would be a holiday cottage in Wales, limitless pamper spa days and an Aston Villa season ticket for life — but whatever way you look at it, that’s one heck of a lot of money.
Read all about it here:
Where are the customers’ Porsches?
Market wobble thingy..
Meanwhile, the whole market correction/ crash/ wobble (delete as appropriate) business rumbles on. Of course, there is a very serious message here, that almost invariably the best thing to do at times like these is precisely nothing. The media seems nevertheless determined to provoke us into action by spouting, round the clock, about doomsday scenarios, how to catch a falling knife and all the usual sensationalist blah.
For me, our client Chas Boinske, founder of Independence Advisors in Pennsylvania, summed it up when he tweeted:
Don’t forget this important fact. The media makes its money from advertising and not from its investment advice. Fear and greed sells.
My own suggestion is that you take Rick Ferri’s advice and switch off your electronic devices and read a good book. If, however, you’re looking for some helpful reading on this subject, I can recommend the following:
The lessons to learn from a correction (Larry Swedroe)
Market timing: You might think you can, but you can’t (Bloomberg)
Volatility doesn’t mean you’ve lost — unless you sell (Oppenheimer Funds)
Buying when markets dip sometimes works, sometimes not (Jason Zweig)
A sign of a broken market? Quite the opposite (Ben Carlson)
When the possibility of loss goes away, so does the probability of gain (Josh Brown)
The economics of the stock market is simple: buy and hold (Independent)
Refugee crisis..
By way of contrast, we’ve also seen this week what a force for good in the world journalism can be. For several years, journalists have risked — and in some cases, sacrificed — their lives to bring home the extent of the horrors inflicted by groups such as ISIS in Syria and elsewhere and the appalling refugee crisis that has ensued. At long last the politicians appear to be taking notice.
As is so often the case, it took a graphic image — the lifeless body of three-year-old Alan Kurdi, washed up on a Turkish beach — to stir us into action. If this account by Alan’s father Abdullah of the moment his children drowned doesn’t put First World problems like market corrections into perspective, I don’t know what will:
“I tried to catch my children and wife but there was no hope. One by one they died”
And, on that sober note, thank you to everyone who’s shared our content this week, and best wishes to our US readers for a restful Labor Day weekend.
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Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector.
