A Quote by John C. Bogle
Mutual funds with superior performance records often falter.
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Millions of mutual-fund investors sleep well at night, serene in the belief that superior outcomes result from pooling funds with like-minded investors and engaging high-quality investment managers to provide professional insight. The conventional wisdom ends up hopelessly unwise, as evidence shows an overwhelming rate of failure by mutual funds to deliver on promises.
There were two qualities about the mutual funds of the 1920s that made them extremely speculative. One was that they were heavily leveraged. Two, mutual funds were allowed to invest in other mutual funds.
I have become increasingly convinced that the past records of mutual fund managers are essentially worthless in predicting future success. The few examples of consistently superior performance occur no more frequently than can be expected by chance.
In general, the hedge funds were clobbered by the 1969 bear market, ending up in many cases with records that were worse than those put together by aggressive mutual funds denied the luxury of short sales.
Wall Street, with its army of brokers, analysts, and advisers funneling trillions of dollars into mutual funds, hedge funds, and private equity funds, is an elaborate fraud.
I think those who invest in mutual funds want someone else to do the thinking for them. But the fact that they can move the money around the family of mutual funds just through a phone call lets them feel that they can play tycoons.
When you diversify your mutual funds, you are diversifying something that is already diversified. Diversifying mutual funds is like taking high octane gasoline & adding water & then adding orange juice to it.
If we observe the performance of only those funds that remain active, we will tend to find that the average performance of the surviving funds exceeds that of the market.
Move your personal investments and retirement funds to socially responsible investment (SRI) funds that support only those corporations that uphold higher standards of behavior. Returns on SRI funds are usually equal to, if not better than, many of the well-known traditional mutual funds.
Surprise! The returns reported by mutual funds aren't actually earned by mutual fund investors.
I think you'll do as well as most professionals. Most professionals don't beat the market. Let's not over-rate my industry. But if you have time, you can be in good mutual funds that have good records.
Our capitalistic scheme in the latter years of the 20th century seems to have lost its way. We've had a "pathalogical change" from traditional owners capitalism where most of the rewards have gone to those who make the investments and assume the risks to a new and deeply flawed system of managers capitalism where the managers of our corporations our investment system, and our mutual funds are simply take too large a share of the returns generated by our corporations and mutual funds leaving the last line investors - pension beneficiaries and mutual fund owners at the bottom of the food chain.
Institutions like mutual funds often worry that if they disclose their plans to buy a stock, copycats will move quickly and drive up the stock before the purchase is completed.
If you don't like the idea that most of the money spent on lottery tickets supports government programs, you should know that most of the earnings from mutual funds support investment advisors' and mutual fund managers' retirement.
The debate can be put in the form of the question: Resolved, that the best of money managers cannot be demonstrated to be able to deliver the goods of superior portfolio-selection performance. Any jury that reviews the evidence, and there is a great deal of relevant evidence, must at least come out with the Scottish verdict: Superior investment performance is unproved.
Over the long run, superior performance depends on superior learning.
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