Tuesday, February 07, 2012

Professor Is Wary of 'Exciting' Investments and Suggests Mutual Funds to Buy - WSJ.com

Professor Is Wary of 'Exciting' Investments and Suggests Mutual Funds to Buy - WSJ.com:

A very good article and interview with FinanceProfessor David Snowball who runs MutualFundObserver.

Two look-ins:
"There's a concept called the loser's game, and in the loser's game the winner is the person who makes the fewest mistakes.

If you ever go and play tennis with one of your neighbors, in all likelihood you are both pretty bad. The person who wins these matches isn't the person with the greater skills but the person who does the smaller number of stupid things.

The same is true when you are your own small investor: You are your biggest enemy. You are going to have the opportunity to hurt yourself badly. You need to minimize the size and impact of the mistakes that you will inevitably make."

"WSJ: How should ordinary investors pick funds?

Mr. Snowball: Investors like stories. But for most people, the best thing they can do is to find a boring investment. Find something that does not excite them at all. A balanced fund or a life-cycle fund that is offered with reasonable expenses and a good management team. They are so dull they are not even fun to write about, but year after year they produce what they promise."
So go bore yourself! Your portfolio will most likely be glad you did!

BTW if you are interested in Mutual Funds, I recommend reading this by John Bogle.

No comments: