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Don’t believe me? Believe these guys.

When somebody tells me something from which they stand to profit, it often makes me a little skeptical. Conversely, when somebody makes a statement that is not aligned with their own personal interests, I’m typically inclined to believe them.

With that in mind, here are a few statements from investment industry professionals that aren’t in line with their own personal interests:

On the wisdom of frequent trading:

Joe Ricketts, founder of Ameritrade: “The best thing, really, for an investor to do is buy a good company and hold it…Trading often and heavy is not something that makes you a lot of money. That’s contrary to my own interests, but it is the truth.” [source]

My conclusion: When the very people who make money by investors’ active trading tell us that it’s not a good idea, maybe we should listen. :)

On Index Funds vs. Actively Managed Funds:

 

Peter Lynch, former manager of Fidelity Magellan: “[Investors] think of the so-called professionals as having all the advantages. That is total crap. They’d be better off in an index fund.” [source]

Charles Schwab: “Most of the mutual fund investments I have are index funds, approximately 75%.” [source]

John Fossel, former chairman for The Oppenheimer Funds:“People ought to recognize that the average fund can never outperform the market in total.” [source]

Douglas Dial, Portfolio Manager for TIAA CREF:“Indexing is a marvelous technique. I wasn’t a true believer. I was simply an ignoramus. Now I am a convert. Indexing is an extraordinary sophisticated thing to do. If people want excitement, they should go to the racetrack or play the lottery.” [source]

My conclusion: Active fund managers (or heads of active-management companies) stating explicitly that index funds will beat the majority of actively managed funds. Seems significant, no?

Did I miss any? Do you have any favorite similar quotes that I’ve left out?

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Comments

  1. Great post! I like index funds, too. But I am a boring investor…

  2. “But I am a boring investor…”

    My favorite kind! :)

  3. Great post and wonderful site. I’m really happy to find you Mike.

    One question – No Load Fund X newsletter -is one of the most consistent top performing newsletters – and it ranks ETF’s and Index funds against active funds. The ETF’s and Index funds aren’t always at the top.

    What say you my friend?

  4. Hi Neal. Thanks for the kind words. I’m a fan of your Wealth Pilgrim blog as well. Been following it for a couple weeks now. :)

    I have several thoughts on your comment. Better to do it as a post I think.

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