Rich ‘Cash’ Charles Heck Jr MSc

This was a timely subject last March, which enabled us to buy and post profitable ideas on ♥ Charts with Hearts at Stockharts.com last March:

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493

Past performance is no guarantee of future results, maybe better.

Stops may be a timely subject now. We shall know in the fullness of time.

Meanwhile, exactly how many times did we pick the wrong investment, buy too late, sell too soon and vow to do better next time?

Here’s a better way to invest:

Two of the biggest mistakes we investors can make are A) thinking we are smarter than the market at selection and timing and B) being patient with losers.

The entire automatic dollar cost averaging index fund industry arose for this reason, epitomized by Admiral, Dimension and Vanguard Funds, with fees as low as 7 basis points (.07%) and Exxon Mobil Computershare.com with free automatic dollar cost averaging:

https://www-us.computershare.com/Investor/Plans/PlansList.asp?state=eStateDisplayPlanSummary&planid=312&cc=US&lang=en&bhjs=1&fla=1&theme=cpu

Warren Buffett may be considered the most successful active investor of all time, with a 2008 CAGR (Compound Annual Growth Rate) of 20.3% over 44 years and a holding company with over $267 Billion of Assets. As one of his associates told us decades ago, it is not that easy to do as well when you are bigger, but we try. Indeed.

So why did Mr Buffett bet on index funds?

On 1 January 2008 Warren Buffett bet Scott Besent, Ted Seides and Jeffrey Tarrant of Protégé Partners, Hedge Fund of Hedge Funds manager, a million charity dollars that index funds would beat active management by 31 December 2018, with results disclosed at each Berkshire Hathaway Annual Meeting.

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This entry was posted on Thursday, October 15th, 2009 at 6:34 pm and is filed under Financial Planning. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.