re: For all those poorly misguided do-it-yourselfers

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I think I'd be satisfied with turning $100,000 into $6M over the course of 6 months. I'm not greedy, I'd be satisfied to leave that in long term treasuries for the rest of my life.

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Man, wish i had your aggressiveness... I audited homebuilders in late 03 and that is when I determined the real estate world was ending... completely miscalled verbally for 2 years when it would happen (way too early... but still was 100% equity so it worked). Once dow hit 14k and the default ticks starting occuring... I knew the time was right to yank.... but I am a pansy and did not make the bets going the other way

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That's pretty much the worst argument you could've made. Somebody "looking retirement in the face" needs to be like 0-10% equity, and they sure as hell don't need to be paying your fees. I feel pity for the 60 year old who walked into your office with his retirement next egg in November 2007 and was told "it's always a good time to buy!"

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Again, you guys always assume the advisor goes all equities or something. No diversification or safegaurds. Especially for the old. Most people with nest eggs are wealthy and want to remain so. That why they work with professionals. For all you know that is how they were invested. No one would know but Wampa.

They gladly pay for the advice and the services. If there was no value to it they could come to tigerdroppings and do it for free.

I love how you all assume we are crooks. Almost all my clients are very happy(even JC couldnt please everyone)despite the market and on pace to reach their individual goals.

Like I have said, do not think you have me pegged b/c of my views on mutual funds. I have SEEN what active management does vs. Indexes. So go link all the articles you want, but its not going to change my opinion.

Why do the "professionals" think it's so impossible for a DIYer to succeed.

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I call B.S., and even if you did it thru equities you will not sustain that rate.

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I have an uncle who has consistently beaten the market by a fair amount because he spends about 4 hours a day researching. What makes you think someone like that is less qualified than someone like you? Do you really get to spend half your work day researching for a single client? Do you really think the financial jargon used in your industry is unlearnable by non "professionals"? You may be good at your job, but you aren't Wall Street Jesus, there are more paths to profit in the markets than going through you. Do you charge your clients extra for looking down on them from your high horse, or does that come free with an account?

That's actually kinda funny. If I'm one of your intended readers, I'd like to see where you think I personally attacked Amsterdam. If I did, I missed it.

Regarding my background - I do not subscribe to any financial magazines. I worked four years in the financial industry doing equity and bond analysis and also some bond trading. In addition, I studied three years for a Ph.D. in Finance and my work has been published in a peer-reviewed journal.

Regarding my sources - it happens part of my graduate study consisted of examining exactly the questions Amsterdam raised. I wrote software that examined returns for the past fifty years. Although the model I used may not have been precisely what Amsterdam did, my point is that I didn't just pick up Motley Fool the other day either.

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Basically investors lose out regularly because the get in an out instead of sticking with a strategy

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This I fully agree with - transactions costs are important. This is why I advocate buying and holding.

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If you use mutual funds with a clearly defined purpose as per prospectus (not indexes) you could be accumulating extra shares in the form of dividend reinvestment and year end capital gain distributions

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Dude - most index funds and ETF's will do this also. Do better research next time.

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We’ll tell people they could buy things that look like the index, so they’ll feel safe, but we’ll take our fees off the top so it never really has the return of the index..

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Not quite. Index funds and ETF's do have a fee but it is generally much lower than for an actively managed fund. You do have to check though.

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Yeah Yeah, and it will be easy cause there is no research involved.

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Not true either. Even with index funds you still have to do good asset allocation.

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You gripe about amsterdam’s fund choices because he has exposure to fixed income devices inside them and whine why the comparisons are not fair

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I didn't make that criticism. Besides, you can buy a fixed income index too. There are many from which to choose.

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You can go get a fund programmed to your specific needs that has great performance, but you can’t get that in indexes.

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Yes you can. You just have to do your own asset allocation. Not terribly difficult.

Asset allocation does matter, and that is something you should probably pay a pro to do. But once that is figured out index funds are still better than their actively managed counterparts.

Now go STFU. Amsterdam at least knew better than you.

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an individual picking himself cant win, but an individual who charges others to invest in his fund can

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To be fair, that isn't necessarily so far-fetched. If you're working for a fund you presumably have access to lots of in-house research. If you're doing it by yourself, you don't.

The real problem with his argument is that most of the research isn't really worth much. Normally the price of something will move before it gets published.

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you guys always assume the advisor goes all equities or something. No diversification

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They gladly pay for the advice and the services. If there was no value to it they could come to tigerdroppings and do it for free.

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As I mentioned earlier, asset allocation to meet the individual's goals is a very fine thing. I do my own because I have the background for it, but someone who doesn't probably should consult a pro. I consult my physician when I get sick, right?

Where we disagree is only in the index vs. actively managed fund choice.

just ran across this, apropos of our S&P @ 500 discussion: LINK

just something to think about...

Herb, you were on here not two weeks ago saying (and I paraphrase until I find the link) "only people with no money should rent. Otherwise, you should buy."

So I don't know why you're acting superior.

ETA

OK. You did say that "it's on a case by case basis." I give you credit for that.

But then you directly went on to say "But, long term, buy. It's much cheaper.... You guys are dead wrong about renting. That's for people who can't afford to buy."

my mistake