Its official, buffet gives a nod to index funds.
He does not have anything against ETFs either, he thinks that ETFs would impose greater temptation to trade, which is a very very valid concern.
Investing has been split into people supporting indexing (ETFs) and cherry-picking stocks (aka buffet style), now buffet seems to acknowledge the advantages of index funds. The 2% management fund in index funds is huge that you have to hold a lot longer to get the desired %, the low fee ETFs therefore offer a good alternative, one disadvantage is the temptation to sell, that depends on you. Another disadvantage is ETFs are not cherry picked, but thats the point, it is proved to be hard to beat the index by cherry picking in the long run.
So, if you can resist the temptation to get swayed based on recent past, you would do good with ETFs. If you are a person who gets into ST buying and selling, you are screwed anyway :)
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment