Warren Buffett is convinced that his strategy will yield better returns than those of hedge fund managers by simply investing in a S&P 500 passive index funds. His premise is that many investors are shortchanged by mediocre expensive funds.. Therefore optimum investment strategy is to buy and hold low cost, simple investments for the long term, a successful strategy.
In examining that strategy, consumers should be suspicious of product labels. Many mutual funds provide disappointing returns, due to high management fees and frequent trading. Simultaneously opportunity costs and volatility risks of passive index investments are misunderstood.
The notion that passive index returns is a secure way for retirement warrants examination. Index funds are a good choice for a particular objective, however they provide no insulation in a declining market, exposing investors to losses and volatility according to CNBC.
While it is well known among investors that an ordinary actively managed fund has performed worse than the market over significant time horizons, there are exceptions to this. Exceptional fund managers are those not in high-cost funds who invest their own money in their fund, with resulting funds that outperform benchmark indexes.
Tim Armour’s thoughts on Post Trump market change are that there will be significant changes occurring rapidly. He thinks that the new administration’s policy will stop sluggish growth already occurring in the drilling and oil sector. Tim Armour of Capital Group also warns to expect increased turbulence in current languishing sectors such as utilities and real estate.
When Tim Armour Chairman of Capital Group was questioned about his perspective on the September 2015 market selloff, he stated that the US had a six-year bull run simultaneously with rising markets in most of the world. The U.S. markets were valued fairly, and valuations were extended for some sectors and companies. Therefore the market correction was largely anticipated and healthy since it eliminated pockets of excess.
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