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Jack Bogle'Too Young And Inexperienced'---Warren Buffett More Than 'Lucky Money'
Wow, it takes guts to call Bogle inexperienced. I thought this was a quote from 60s but not so.
The article references Keynes. Keynes made and lost fortunes a number of times. Along the way Keynes changed his investing style a number of times. So. Some of what he said early on directly conflicts with others later in his life. He did give a lot of speeches etc so you can quote him in many different ways. Anyway, in his latter life he was a convert to value investing. Did he outperform a passive approach. Really hard to tell as indices were not well developed at the time. As impressive as it might have seem at the time he might have still underperformed. Hard to know for sure as DJIA might not be an appropriate index to measure him.
Then the post goes on to say:
The US market was lower in 1942 than it was in 1905. Could you wait that long? Huge opportunity cost. Some other indices went to zero as many will this century.
That may be true except that such assertion excludes the effects of dividends which was much bigger in those days. Secondly, it also ignores the fact that active management did not really save one and most active managers did experience that awful time as well. Finally, DJIA is a terrible index. Only 30 companies and at the time was heavily concentrated into a few industries. The threshold to beat was low but many active managers did not excel either.
Today, information is disseminated more quickly and more equally. The opportunities that were available to those managers are no longer there. Insider trading and selective disclosure were common games back than and was part of active management game. It is illegal now. It is much harder for active manager to outperform.
Comments
The article references Keynes. Keynes made and lost fortunes a number of times. Along the way Keynes changed his investing style a number of times. So. Some of what he said early on directly conflicts with others later in his life. He did give a lot of speeches etc so you can quote him in many different ways. Anyway, in his latter life he was a convert to value investing. Did he outperform a passive approach. Really hard to tell as indices were not well developed at the time. As impressive as it might have seem at the time he might have still underperformed. Hard to know for sure as DJIA might not be an appropriate index to measure him.
Then the post goes on to say: That may be true except that such assertion excludes the effects of dividends which was much bigger in those days. Secondly, it also ignores the fact that active management did not really save one and most active managers did experience that awful time as well. Finally, DJIA is a terrible index. Only 30 companies and at the time was heavily concentrated into a few industries. The threshold to beat was low but many active managers did not excel either.
Today, information is disseminated more quickly and more equally. The opportunities that were available to those managers are no longer there. Insider trading and selective disclosure were common games back than and was part of active management game. It is illegal now. It is much harder for active manager to outperform.
IMHO, the post does not have much merit.