'10 Questions' Goes Back to School

Labor Day Weekend calls to mind a few essential memories from adolescence: back-to-school planning, the sinking feeling that you forgot everything from the last school year, and an end to TV reruns.

With that in mind, today's 10 Questions aims to encompass all these hallmarks of Labor Day -- in other words, it's a rerun of the best lessons from previous columns over this past summer. And investing timetables are a bit like school years -- sell in May and go away, and then endure the low-volume summer doldrums before fall brings renewed market activity.

So, for the poor readers who are trolling financial news sites on Labor Day, try not to think of today's column as a rehash of previous Q&As, but as a refresher course of timeless investing advice to help prepare you for the coming year. Read on for the best morsels from 10 Questions since Memorial Day weekend.

Ted Aronson, Aronson+Johnson+Ortiz

On Aug. 27, we published a 10 Questions interview with "The World's Most Honest Money Manager," Ted Aronson. Aronson runs the $11 million (QUSVX Quote)Quaker Small-Cap Value fund and also manages institutional assets for his Philadelphia-based firm, Aronson+Johnson+Ortiz. But the reason Aronson is so much fun to talk to is his unflinching honesty: He rails against Wall Street and says index funds are the best bet for most investors. In the following excerpt, Aronson explains why a highly successful active manager would tout the virtues of passive index funds.

Aronson: There are three reasons why index funds make a lot of sense. First, this is a competitive ball game. The past three years -- I guess you could call it a melt-up, then meltdown -- have humbled everyone. It's a very competitive game and most don't measure up to the performance of the indexes.

Second, investors need to understand that what Wall Street is expert at is separating clients from their money. When the pie goes around, there are more fingers in it than the owners have any idea -- so expenses are amazingly substantial.

I'm not just talking about brokers, mind you, but loads and other fees, and the government, too. If we accumulate wealth, Uncle Sam is in for a cut. Put all the pieces together and [Vanguard founder John] Bogle has it right: It's not easy to outperform.