Ever notice how no matter what's going on with stocks, television pundits and even some financial columnists (gasp!) always seem to be claiming that now is really a "stock picker's market"? The problem is, it's never the same stock picker's market for very long.
It's like the gambler who swears that the next hand will be his: You do win some of the time, but it never compensates for the losses you'll rack up over the long haul. That common sense hasn't sent tumbleweeds rolling through Las Vegas, nor has it eased the retirement worries of many investors.
Throughout this long, hot, topsy-turvy summer, intrepid TSC senior writer Beverly Goodman has been examining the benefits of betting
the house. Armed only with elbow grease and a mountain of evidence, she's presented the case for indexing.
Since there are still trillions of dollars in actively managed funds, potential converts to indexing are out there. Here's a package of her best work on indexing.
Passive Management: It's Not an Oxymoron
Passive management has been employed by portfolio managers and institutions for decades, but many investors misunderstand just what it means. Passive portfolios are structured to take advantage of academic theory, rather than manager bravado. In this column, Beverly explains what passive management is
isn't -- and why it's worth considering.
Active Mismanagement: The Case for Index Funds
Did you know that in the first five months of this "stock picker's" year, the average actively managed fund
Standard & Poor's
index in seven of the nine Morningstar categories -- and that in one of the remaining two it essentially tied the index? In this column, Beverly discusses the latest research bolstering the case for index funds.
The Best Fund Family You've Never Heard Of
Here's a hint: They don't want your money. Dimensional Fund Advisors comes a close to perfection as you can get when it comes to passive management, and the proof is in the pudding. Want to know how to get in? Read on.
Brave New World for ETFs?
With the boom in exchange-traded funds -- which are similar to index mutual funds but are bought and sold on an exchange like stocks -- the industry is rolling out scores of new offerings. But is that a good thing?
Another Alternative: A Hedge Fund Index
Standard & Poor's recently announced that it is creating an index of hedge funds. The index is aimed at providing investors with a variety of highly correlated hedge funds that have agreed to greater transparency and can be used as a benchmark. More importantly, S&P also plans to launch a raft of products based on the index. Industry officials have voiced skepticism that such an index will even be useful, let alone beneficial.