Avoid Having Your Investments “Skimmed”
I highly encourage you to read the following data. It is simply shocking!
What’s even more disturbing is that investors continue to turn a blind eye to the facts.
Recently, at the Investor Coaching Event, I stated I would probably “jump off a building if there was a 94% chance of no harm to me.” I would get a medical procedure if there was a 94% survival/cure rate.
Now, if there was only a 6% chance of survival, cure, or no harm- I wouldn’t even consider it. Yet everyday, Investors continue to make judgements, take action, and invest in things that have only a 0.4% chance of success!
This information really saddens me. I hope you will share this article with your friends, family, and anyone else that you care about. Help someone you know today.
The entire financial management industry is a profit-skimming rentier arrangement.
It may seem uncharitable to note that only .4%–that’s 4/10th of 1%–of mutual fund managers outperform a plain-vanilla S&P 500 index fund over 10 years, but that is being generous: by other measures, it’s an infinitesimal 1/10th of 1%.
Wealth Strategy: Investing in Low-Cost Index Funds
According to the folks at the Motley Fool, only ten of the ten thousand actively managed mutual funds available managed to beat the S&P 500 consistently over the course of the past ten years.
Frequent contributor B.C. recently screened 24,711 funds on Yahoo Finance’s fund screener and 17,785 funds on the Wall Street Journal’s online screening tool. He found that of the recently screened 24,711 funds on Yahoo Finance’s fund screener, a mere 5 managers beat the S&P 500 index over five years.
17,785 funds on the Wall Street Journal’s online screening tool found 71 funds out of 17,785 outperformed the index over ten years.
That’s .4% of managed funds, i.e. an index fund beat 99.6% of all fund managers.
So what do we get for investing our capital in mutual funds and hedge funds? Ten out of 10,000 is simply signal noise; in effect, nobody beats an index fund.
The entire financial management industry is a rentier arrangement: they skim immense profits and return no productive yield at all. This is of course a key characteristic of the neofeudal debtocracy that is the U.S. economy: various cartels and state fiefdoms operate rentier arrangements that skim a percentage of the national income, protected by the state and endless PR from any market forces or transparency.
Eventually, a growing plurality of so-called “investors” will discover that the stock market is not for wealth accumulation for the majority of “investors” but a wealth-transfer mechanism from the investor to the so-called money “managers” who benefit from fee income generated by the wealth-transfer process.
Little do most “investors” know that they are funding the perpetuation of the industry’s fraud, their own under-performance, and failing to match risk-adjusted returns of cash and fixed income after fees, taxes, and inflation over a cycle.
So, the big question is- Are you still using Actively-Managed Mutual Funds?
How much wealth have you given up because of bad information? Or your ego?
Put a dollar amount to it…has it cost you:
A few Cruise vacations?
A house!? Yes, I’ve actually seen it!
$1,000,000 dollars!? Yep, seen that too!
The facts are the facts, and you can’t change them, alter them, wish them away, or think you’re different and you know better. If you’re using actively-managed funds or trying to pick stocks…you’ve LOST the game!
So what’s the answer? 3 Power Strategies to Fix your Portfolio Fast!