Is it time for the Warren Buffet strategy?

Dump the financial advisor and buy VTSAX.

No brainer.

The dead outperform the living

If you don't need it for 20 years, put it in XSD or SOXX and keep contributing every month (preferably in a Roth).

For majority of people, financial advisors are more like psychologists or counselors than having world changing portfolio advice.

I think the higher net worth individuals should have someone who helps with tax strategy as that will pay for itself and often times needs to be thought of decades in advance.

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"Buffett made the bet in December 2007, arguing that a fund holding the same stocks as found in the Standard & Poor's 500 index could beat the combined performance of a group of hedge funds over the following 10 years." He won.

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A few caveats:

I believe he sold puts on the S and P rather than just buying SPDR or whatever. That gave him a lot of leverage that is likely not advisable for the little guy.

Also, I think he used a fund of funds for the benchmark to beat - that is super high fee, inefficient way to access hedge funds.

And consider: the shape of your equity curve matters. 15 months after December 2007, your stocks were down like 50%. You had no dry powder. Had you had some "alternative investments" - like hedge funds - you likely would have been down way less, and possibly could have been on the offensive in the cheapest market in 75 years. There's also a psychological benefit to not living day to day knowing your net worth has been halved.

So, I am in qualified agreement with Buffett - but it sure helps to be mega rich first.

I agree with others in the thread that if it's truly 25-40 year money, indexing is great.

If I were young, I would go with VTSAX…but since I am retired it’s preferreds, baby bods and CEF’s. The income is fantastic

Team MT.

Thanks for the great feedback.

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For majority of people, financial advisors are more like psychologists or counselors than having world changing portfolio advice.

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I feel this is me. I like my guy but mainly to chat with and discuss market forces with.

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I believe he sold puts on the S and P rather than just buying SPDR or whatever. That gave him a lot of leverage that is likely not advisable for the little guy.

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good point. the idea is sound, sell puts on $SPY and invest the premium in $SPY. As always , nothing is a sure thing.

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Indeed he did. As best I can remember, from 2004 to 2008 or so, he sold various tranches of puts on the S&P 500 that expired as late as 2026. The premiums collected were somewhere around $4 billion.

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mind blown

I’m thinking in the end it just makes sense to index and go from there. I just hear too many people saying ditch the financial advisor. I’m no way rich enough to need one

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"Buffett made the bet in December 2007, arguing that a fund holding the same stocks as found in the Standard & Poor's 500 index could beat the combined performance of a group of hedge funds over the following 10 years." He won.

I have stuff every where. I have a financial advisor that takes a rake or a fee when I buy into a fund. Target date stuff in the 401k. Blah, blah, blah.

Just like Whole Life, Reverse Mortgages, Loaded Funds, and Structured Notes; I have heard, "dump the financial advisor and pay by the hour if you need him/her."

OK MT, I'm 40. I've been thinking about just going all in on a tiny fee, something like Vanguard, S&P 500 index fund, and dropping "my money guy".

Thoughts?

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Dump him. 98% of people have no "need" for a money guy.

My parents have probably lost tens of thousands (if not more) in percentage fees over the years and I would be shocked if they have outperformed or even matched the market. I tell them yearly to drop him and just do it themselves but they aren't interested. Oh well, guess it's worth it to my dad to work an extra year or 3.

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My parents have probably lost tens of thousands (if not more) in percentage fees over the years

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My parents when they retired were using a financial advisor to manage their investments. At the time, I was in my early 30s and had made the switch to primarily index funds.

I considered managing their investments as well. But I was very hesitant as I didn't want to mess up their retirement. Also their portfolio was prob 6-8x mine at the time which was a bit daunting. My parents had no desire to handle this themselves.

So I let it be for a couple years and compared performance between the advisor and myself. Once I felt comfortable that the advisor wasn't doing a better job than me; I took it over. I've saved them at least $100k in fees over the years. What many people don't realize are the hidden fees of advisors using expensive funds vs low cost index funds.