I meant to mention this Stockpedia interview earlier this year by the charming and kind Ben Hobson, but between Thanksgiving and holiday travel, it kind of got away from me.
Its long form, and covers everything from writing to investing to podcasting. If you are not sick of my schtick by now, well, this can help push you over the edge.
Here is a short excerpt:
You’ve been at the centre of the US investment industry for the last 20 years. When you look back now, what lessons do you think have been learned?
In the 1990s you had all these rumours, tips and mayhem, and then the dot-coms collapsed. Then you had the analyst scandals, the accounting scandals, the housing boom and bust and then you had the commodities run up, which collapses.
My pet theory is that about a decade ago, following the financial crisis, the individual investor in America turned around a said: “Hey listen, this whole market is rigged, so rather than play your game I’m just going to find a low-cost index fund. Here’s Vanguard. Here’s BlackRock. One is $6 trillion and the other is $5 trillion. I’m going to give them my money for the 30 or 40 years until I retire, and I’m not going to waste my time playing your game.”
Does it makes sense to spend a lot of time, energy and effort picking active fund managers or selecting individual stocks rather than owning a broad, globally diversified index of low-cost assets, rebalanced once a year for 30 or 40 years?
Do you think that idea is now becoming more mainstream?
I’ve been saying the same thing for decades, it’s what we believe and it’s what we’ve always done. When I was at a firm that had a really interesting, quantitative methodology of stock selection, it was never a case of saying all your money should be in it. If you want to have a portion of your portfolio in something that is a little more juiced, and has the possibility of greater returns, first recognise that you’re taking on more risk and accepting the possibility of weaker returns. But if you want to have the slug of your portfolio in something active, I don’t have a problem with it. As long as the bulk of your money is in low-cost, global indices, no matter how much you mess around with everything else, you’re going to insure your retirement or your generational wealth transfer, or your foundation, is safe.
For those interested, there is a lot more . . .
