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?