http://www.marketwatch.com/story/wh...ntless-john-bogle-2015-07-30?dist=tbeforebell Come to your own conclusions, but I think Jack is losing touch here. He is always pushing the point about long, long term investing when in fact it's been proven that many traders do well with short-term trading.
I was just about to post that exact same comment ! I don't think he is losing touch. On the contrary, he is just 'marketeering' for his funds, i.e. 'Don't think for yourself, give me your money instead'.
I can't say anything bad about his ideas, either. His work is backed by the author of Random Walk down Wall Street. I recommend Malkiel to everyone who wants to learn about "Trading".
It is common knowledge and over mentioned. You wouldn't introduce Sir Paul McCartney as an original Beatle. Burton Malkiel's work is practically the foundation of Index investing. The book makes his research accessible for all. Incidentally, Malkiel is on the board of Vanguard. Caveat. Obviously the book has nothing to do about trading. It's just what I recommend to newbs and family who ask questions.
These "investor" guys, that essentially manage a lot of older ladies money [they outlive their high earning hubbies], are terrified of the day when they are replaced by a computer. They are the gatekeepers of the CW [Conventional Wisdom] with ideas like "you can't time the markets". Buggywhip makers were saying "cars will never replace horses" once upon a time LOL. Forget this krap, there is some guy somewhere working on his software that will eventually completely dominate this current crop of money managers.
Not to quibble- I've watched a number of interviews with Bogle, read a couple of his books- and must confess I'm a fan of his point of view from an investing standpoint- and Vanguard funds low cost index approach for investing in general. I don't know that Bogle is concerned at all with the relatively small number of would-be active retail traders out there- They are a real minority compared to the millions of people with investments in their IRA's that never intend to take on trading- they just seek the benefit they have been sold- that "Investing" over the long term will lead to compounded growth and eventual financial higher gains- This is the audience that Bogle speaks to. There are a small number of traders that are successful- but the % that are -are in the great minority- and- over time- and changing markets- That percent of successful traders likely declines- substantially- I don't disagree- that short term trading may prove to be more profitable for some traders- (also in the short term) but where is it "proven" that "many" traders also represents the majority of would-be traders? And - can one's short term trading - success- be replicated for years of outperformance ? Not likely is the answer for the majority, for a variety of reasons- - The same is true for Investment advisors- And i think this is the market segment that Bogle wants to inform the average Investor about- The average investor pays for the professional guidance and hopes they will outperform the markets to pay for the higher expense fees they charge for their services. Actually, the average investor is ignorant of the amount of fees they are actually being charged by load fees, turnover dilution, 12-b-1 fees and "other" The reality is that the high percentage of professional advisors fails to meet or exceed the benchmark index year in and year out- and the very few that do dimish in number over a longer period of time- Which means- If a person is an investor for 20-30-40 years- paying for net higher cost- underperformance only dilutes the Investor's return. One of the strong points he made- from an Investing- not trading- point of view- Is that while a number of active investment advisors - while managing other people's money for a fee- may have a period of outperformance against the market- Over the longer term, the number that can continue to outperform a benchmark- passive approach dimishes down to a very low percentile-and the Investors are still paying fees that would only be justified by a continued market out performance. What is striking in the effect of costs against the Investor's account- is that paying what seems to be a nominal and 'minor' 1 or 2% expense ratio annually has a huge dilution on the investors total return over time. 1% seems a small expense- but consider it is 10x the expense ratio of $.10 of an index fund. "trading' and "investing' should be viewed separately- They are not the same critter. From personal experience- I would recommend that aspiring traders separate their would be- trading accounts from the Investment accounts - and treat them as separate entities. These are not at all the same focus- and the investment account will be your cushion as you try your trading prowess. You can be Both Trader and Investor- but need to be capable of wearing separate hats. Not that easy to separate the two....... Put money into the Investment account monthly- Make the Trading account 'Earn" it's own way once you initially fund it- . Have fun trading- Treat it like the business you want it to become- Track the hours you spend in the pursuit of success- Track your commission costs- If you are trading in a taxable account- track the taxes and CPA fees. Take your net trading gain at the end of the year- deduct the taxes and fees- divide by the hours expended- HMMM- Would you like Fries with that order? Be glad you also chose to be a disciplined "Investor" separately. Max out the company match in your IRA,in low cost growth funds- Then Max out your Roth in a Vanguard Target Date-very simple to do- Or brokerage account- You select the funds- or 50k at a .30 expense ratio they will handle. and fund the trading account last- This last item is a major item- Personal Time- Your personal time has Value- Interesting idea? Consider that if you were an investor - and looked at your accounts once every 3 months for 3 hours on a weekend- and your time is worth $ 7.50/ hour- Your personal expense of time is worth 3 x 7.50= $22.50 or $7.50 per month. Your net is the remaining gain If i am an active trader- spending 3 hours per day-5 days per week- 60 hours per month- This is my 'business' is it not? 60 hrs x $7.50 = $450.00 net cost of my personal time My net expense time cost is 3 months x $450.00 = $1,350 of personal time at minimum wages. When i make a choice to spend my personal time on a computer screen seeking investment ideas or-emails- or stock screenings- i have made a decision to spend my time there vs elsewheres- perhaps with family, friends etc- Have i made a good expenditure worth the net value ? Suppose this is how i seek to make my living and is not simply a sideline interest/ am I putting in 40 hrs per week, or more? What is my pay rate after expenses? Doing the job- trading- and running the business- are 2 different animals altogether. Sometimes- we lose sight of the total picture- Hmmm- got off topic here - sorry- hadn't been posting-or trading- for a bit- had a moment to log on to ET and your Bogle post caught my attention. Thought it was worth taking the other side ......different perspective -point of view. And caught that investing nerve- Since my personal results suggest i am a better investor than trader- had to respond..... SD
I would have to agree to the truth in your statement that Index Investing along with EMH has been sold to us in an easy to digest form....for Widows and Orphans. Its has been an asset gatherer's handbook for decades. But in reality, it may be that what is required is a momentus effort on each traders part to decipher this complicated business. On the opposite side of the spectrum, Andrew Lo wrote " A Non-Random Walk through Wall Street". Not an Amazon best seller and requiring much more know-how. Thanks for reminding me.
Considering the time it takes to get really really good at day trading, years, considering risk to reward will normally be inverse when you consider all the trades one does, considering there are far more wealthy investors than day traders, have to agree with Jack. It is getting tougher and tougher to day trade, commissions/fees and slippage due to program trading, average per trade getting smaller. When you consider how much you totally risk in one day and how much you work to keep, it is less than most expect. Whereas longer term in a bull market, monkeys can pick stocks. And you have to factor quality of life, radiation from screens, getting exhausted of watching little bars form. Better to program systems and learn where the big money is in long term, stocks, dividends and options.