Indexing Will Fail Investors in Coming Decade

A recent article in MarketWatch argues that equity investors are facing market conditions which will “no longer deliver acceptable returns”, even for index investors. “A fundamentally different, outside-the-box approach to investing will be required,” it says. Here are the reasons outlined, which “have the potential to create conditions resembling a perfect storm”: The current “debt super-cycle” is ending—servicing higher levels of debt ties up increasing amounts of capital which, the article argues, could otherwise be… Read More

Index Fund Bubble on the Horizon

Index funds have been “bumping up” the prices of all stocks in the major indexes as managers put “record amounts of shareholder money to work,” says an article in last week’s Institutional Investor. This has created a bubble that could spell trouble for passive investors but present opportunities for active ones. John Rogers, CEO of $2 billion Ariel fund, said that when the downturn occurs, the “mindless selling that index funds must do” will allow active… Read More

Debating with the Oracle of Omaha

It’s tough to argue with one of the most legendary investors of all time, but Paul Merriman (founder of Seattle-based Merriman Wealth Management) apparently takes exception with some of Warren Buffett’s principles, particularly as they relate to investors in retirement. In a recent MarketWatch article, Merriman outlines his interpretations and gripes with seven Buffett principles: Hold plenty of cash to withstand financial challenges and don’t be afraid to use it for “lucrative investment opportunities.” According… Read More