3/30/2012 10:36 AM ET|
Win in the market the lazy way
You don't need Wall Street to help you make the right investment moves. Just create a 'Lazy Portfolio' and follow 6 simple rules.
"America's investors have been ripped off as massively as a bank being held up by a guy with a gun and a mask," former Securities and Exchange Commission Chairman Arthur Levitt warned in an article in Fortune magazine a decade ago. That same year, in his classic book "Take on the Street," Levitt lambasted the fund industry as "a culture that thrives on hype (and) withholds important information" and asserted that the industry "misleads investors."
Today, it's worse.
Lazy Portfolios were born as a defensive move against this relentless war by guys ripping off America's 95 million Main Street investors. And the strategies of men like Levitt,Vanguard's Jack Bogle, Nobel economist Daniel Kahneman, Warren Buffett, Yale's Robert Shiller and other industry giants were the inspiration.
Lazy Portfolios give investors a far superior alternative to gambling their retirement savings at Wall's Street's casino. Simple solutions: Just three to 11 no-load, low-cost index funds and zero trading. And in the past decade we've discovered eight great Lazy Portfolios that investors are using as guides to building their own portfolios, without brokers or advisers.
Wall Street, the fund industry and brokers hate these eight Lazy Portfolios. Not just because they consistently beat the Standard & Poor's 500 Index ($INX) on a long-term basis. Not because they're based on the exact same Nobel Prize-winning model Wall Street's top wealth managers use. Not because you don't need any fancy algorithms to rebalance your portfolio. And not because Bogle calls industry insiders casino "croupiers" because they skim a third of your market returns off the top, leaving you leftover crumbs.
The more you trade at Wall Street's casino, the richer your broker gets.
Listen closely: The No. 1 reason Wall Street, fund insiders and your stock broker hate our Lazy Portfolios strategy is simple: They don't make money unless you buy, sell and trade. No commissions. No fees. They can't get rich, or richer, unless you're playing at their rigged casino, where the house always wins.
Since my days at Morgan Stanley it's been obvious that Wall Street gets rich on "the action," on all the hot trading occurring in its casinos. More commissions and fees means it can skim off more of America's retirement money.
Want hard evidence? In the decade ending in 2010, Wall Street's stock market lost an inflation-adjusted 20% of America's retirement money. Your money. So yes, Wall Street brokers and other insiders hate Lazy Portfolios. They want business as usual.
Several years ago, I started tracking the best portfolios in America: Simple portfolios used by Nobel Prize winners, multimillionaires, conservative institutional fund managers, neuro-economists and average Main Street investors.
We also found solid examples in popular books and publications like "The Coffeehouse Investor," "Motley Fool Investment Guide," "Investing for Dummies," "The Idiot's Guide to Investing," "The Gone Fishin' Portfolio," even "Dilbert and the Way of the Weasel." All winners.
Early on we discovered something amazing and brilliant. All these winners were saying the exact same thing: All you need is a simple, well-diversified portfolio of three to 11 low-cost, no-load index funds to create a long-term portfolio that wins in bear and bull markets. And you do it with no market timing, no trading, no commissions. Lazy Portfolios are that simple.
What about the thousands of other stocks, bonds and mutual funds being hustled by brokers? Forget them!
But don't you need an adviser? No. As personal finance guru Jane Bryant Quinn put it in her classic "Making the Most of Your Money," "Most of us don't need professional planners."
We don't even need a full-scale plan. Conservative money management isn't hard. To be your own guru, you need only a list of objectives, a few simple financial products, realistic investment expectations, a time frame that gives your investments time to work out and a well-tempered humbug detector to keep you from falling for rascally sales pitches.
Don't put off decisions for fear you're not making the best choice in every circumstance. Often, there isn't a "best" choice. Any one of several will work.
Use your judgment. Forget your broker and adviser. Trust yourself. Customize a portfolio that fits your needs, your age and your lifestyle. You can do it yourself. This strategy is being used successfully by working boomers and millionaires, young families with modest savings, college students just starting out, even grade-school kids.
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VIDEO ON MSN MONEY
BEST INVESTMENT ADVISE I EVER RECEIVED -
NEVER EVER INVEST IN AN INVESTMENT YOU DO NOT UNDERSTAND AND / OR ONE THAT SOUNDS TO GOOD TO BE TRUE.
Remember the GLASS-STEGALL ACT? It was repelled in 1999 and the commercial bankers were SO HAPPY. This is when banks went on a rampage to sell their CD investor - yes -ANNUITIES. You ask why? They make so much money in fees it is like stealing candy from a baby. The sells pitch is that the money earned is tax deferred until you take the money and they usually pay an above market guaranteed teaser rate for a set period and have a floor rate they will never go below.
Many uninformed people were suckered into annuities by their trusted banker. Sales people were and are pressured into selling this product so the bank can take the huge fees income these products give to sellers of them.
I worked for a bank which sold tax deferred annuity products as IRA investments. IRA's are already tax deferred, so this was really a bad deal for the consumer and as far as I am concerned- it was outright fraud!!!
You ask what the Glass-Steagall Act did? It was enacted in 1929 to separate investment and commercial banking activities. Stock brokers were stock brokers and commercial banks were bankers. This is the way it should be again.
For those of you who are dead-set on "beating" the market, have fun with that.
Firstly, if something seems complex, it means one thing only...you haven't learned enough about it...full stop. Investing and financial planning IS complex for most people because they are under-informed about what is really going on in the financial markets. Most people only have access to information that is publicly disbursed and either manipulative or mostly conjecture, though passed off as "great insight". What is really controlling the market is the flow of money...in simple terms, where there is gold, there are prospectors. As illegal as insider trading is SUPPOSED to be, it is a large contributing factor to why some people make bushels of money and others end up losing their retirement. Prospectors don't like competition. Another contributing factor is the profound skimming that goes on with mutual funds. Most people whom are left out of the "good information" click end up in mutual funds hoping to ride the coat-tails of a more competent person at the helm. This basically creates a pot of milk for fund companies to skim the cream from without any individual being noticeably targeted. Those with large sums od money, which happen to be institutions, have the ability to move the market simply by moving these assets in and out of securities at any given time. They will not tell most investors when and where, but there are those that are privy to this information (and buddies that rub elbows with them) who will capitalize greatly on this. When questioned, it will be attributed to their great research. Those that research relentlessly are working far too hard in comparison to the real money spongers. Don't buy into the hype unless you are akin to a privileged fraternity. There is great interest in the USA on controlling wealth...if you double your money, you can be sure the "lords" have quadrupled theirs. A race that cannot be won. Aren't you glad our tax money supports the SEC ?? Oh NO !! Don't tell me they're in on it TOO ! Uncle SAM has an insatiable appetite for MONEY !!
I see MSNBC is in full sales mode again! Folks, it's all about them getting their hands on your money. The stock market is NOT a place to "invest"..........it IS a place to BUY AND SELL. That's why it's called a stock "market".
1. Why are all the rules of the stock market tilted in favor of all of the brokerage firms? Why are there organizations like FINRA that stalk anyone who makes more than 4 trades in a 5 day period? Why does the SEC only "fine" firms that commit fraud in the markets instead of having the FBI arrest them and toss them in prison for their crimes. Why doesn't the SEC automatically give the money back to the person/persons that it was stolen from?
2. If economist and investment advisers are so good, why are they still working? Since their advice is so good, they certainly rich by now and don't need the money they make writing these BS advice articles.
3. Why are investment firms trying so hard right now (2012) to sell their overpriced investment vehicles and stocks........why weren't they working this hard to sell them back in 2009 when the prices of stocks and all investments were cheap?
4. If the economy is as good as they all say it is, why have the worldwide central banks been pumping money into the stock markets since November 1, 2011?
5. Why the hell isn't the FBI investigating each and everyone of these news media outlets, economists and investment advisors for "touting" (i.e, "pump and dump") stocks?
Investing, the way most of these articles read, is fine, if the average person can allot 10% of their paycheck. Can anyone, drawing minimum wage, afford $10 - $15 a month to float into a fund that you have to sit on and can't pull any profits from for 40 years, hoping you'll live long enough to use it later?
Try surviving on $300/week paycheck, Mr. Politician. We can't vote ourselves a pay raise, and then you want to fine us if we can't afford to buy our own health insurance? Our 401K's are losing more than they're gaining, social security is being drained, and then these stories slap us in the face like a dead fish. Takes money to make money, if you ain't got it, you probably ain't gonna get it.
Not a bad article, although it oversimplifies a lot - and I do mean, a LOT. Two things it misses:
- Investing is not Financial Planning. A financial plan is a roadmap to ID your goals and show you how to get there with the least risk. There is a reason why you can only get financial planning done by a certified/registered advisor - most people don't realize what they don't know, and the ignorance can sabotage their DIY planning. As Boomers hit retirement, it's their inability to accurately assess the risks to achieving their goals that is most likely to trip them up. I'm a Boomer, and have watched this happen to family/friends time and time again.
- It has been shown that what the markets are doing when you retire does, in fact, affect your financial health considerably. Unless you have one of the rare Defined Benefit Pensions, a "down" market on the day you retire can seriously increase your chances of running out of money before you die.
well, you are all grown-ups so make your own decisions, but this article is basically hogwash. wall street LOVES investors who buy and hold because most of them panic and end up selling low, waiting and buying back in at the highs, and then the market crashes again and they sell low when it appears the world is coming to an end (like 2008).
some of you posters got it. lazy investors have lazy money and make lazy returns. those who work at it tend to do much better. why is there no mention of Tactical Asset Allocation - is this guy saying that he couldn't spot the tech bubble in 1999 when certain tech mutual funds made 254% that year? really? not a time to sell high? and then the S&P 500 bounces off 800 twice in late 2002 and we invade Baghdad with NO WMD - and that wasn't a time to buy low? and then the market zooms up and many economists were predicting the housing crash as early as 2006 and he couldn't spare the time to get his lazy self off the couch and research this because of laziness and again sell high? and then the markets crash over 60% in 2008-2009 and you he doesn't have the basic math skills to buy low? bushwa and poppycock.
next, what about the concept of Opportunistic Rebalancing. 60% stock and 40% bonds and any time they get out of balance by maybe 5% or 10% one sells the one that is up and buys the one that is down? this concept is a huge huge huge improvement worth amazing amounts of additional money over straight buy and hold.
and people don't need financial advisors? that's like saying people do not need doctors, lawyers or insurance agents either! this guy is whacko from the get-go. go see a professional, fee-only, independent, certified financial advisor if you must be lazy but our clients will be advised to erase all articles such as this from their memories. what nonsensical claptrap. makes me wanna
For the most part this article is obvious nonsense. Everybody's situation is slightly different and they should act accordingly. For example, lets say you had worked all your adult life had gotten married, raised a family and put all your kids through college, have no savings. It's early 2000 and you have just received an inheritance of $200, 000. According to this article you should invest it all in a few index funds and just leave it there. WRONG.
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