Saturday, July 21, 2012

The Investment Advisory Ruse, Part 4


I have been recently writing about the absurdity of using expensive professional advisers when it’s so easy to invest these days on your own. Especially when you give up the notion you can outfox the next guy by trading stock in and out of the market, or picking hotshot winners before they become the next bonanzas.

Use low-cost indexed funds and ETFs and you’re on your way to better performance as the simplest of investors.

Besides, do you know how little institutional investors get these days, despite the advisers/hedge funds they use?  I give a 5% return as a figure in evaluating adviser true costs. However, many institutions, foundations and pension fund's using “top-notch” advisers are not getting even 5%. The California Public Employee’s Retirement System (Calpers)  had a 1% return for its fiscal year ended June 30, 2012. (See the Earl J. Weinreb NewsHole® comments.)

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