Why I Index

Why I Index Community Watch
rickferri | 07-24-05| 01:57 PM| Total Replies: 67
.
I index because I grew tired of being disappointed by active funds
that delivered wonderful returns right up until the day I invested.

I index because for years I only discovered funds that I should have
owned, not that I should own.

I index because I enjoy my free time and have not seen any overall
gain from the hours spent analyzing active funds.

I index because it occurred to me that those who argue the strongest
for active funds tend to be the same people who benefit the most if I buy
active funds.

I index because I trust indexes more than active managers. Indexes do
not get board, get overconfident, quit, die, or defect to other firms.

I index because indexes are transparent. I know what my money is
invested in and why.

I index to eliminate risk without sacrificing return. The high
probability that an active fund will not keep up with its benchmark adds
uncompensated risk.

I index because as my assets grow I prefer simplicity to complexity.

I index because as I get older cost matters more to me.

I index because I now realize that all I need is the return of index
funds to achieve my financial objectives. And that is what really matters.

Rick Ferri


Why do you index?

P.S. You may or may not index. If you index, please contribute to the
list if you feel inclined. If you do not index, please start another
conversation to express your opinion. A suggested title for that
conversation might be "Why I Do Not Index".

Re: Why I Index

"NoEd" <> wrote

> I index because I grew tired of being disappointed by active funds
> that delivered wonderful returns right up until the day I invested.

I bet the idex funds did poorly during that time as well.

> I index because for years I only discovered funds that I should have
> owned, not that I should own.

This applies to index funds as well.

> I index because I enjoy my free time and have not seen any overall
> gain from the hours spent analyzing active funds.

Another plus is that if you don't look you won't cry about it.

> I index because it occurred to me that those who argue the strongest
> for active funds tend to be the same people who benefit the most if I buy
> active funds.

Dumb.

> I index because I trust indexes more than active managers. Indexes do
> not get board, get overconfident, quit, die, or defect to other firms.

I disagree. They stay fully invested in bear markets from start to finish.
That's overconfidence.

> I index because indexes are transparent. I know what my money is
> invested in and why.

Not if your free time is important to you and you don't look.

> I index to eliminate risk without sacrificing return.

That's just plain rediculous.

> I index because as my assets grow I prefer simplicity to complexity.

Said another way, I have no idea what I'm doing.

> I index because as I get older cost matters more to me.

It should be risk, not cost, that matters most.

> I index because I now realize that all I need is the return of index
> funds to achieve my financial objectives. And that is what really matters.

Then I hope the next 5 years are kinder to you than the last 5.

Re: Why I Index

SCOREBOARD:

www.spiva.standardandpoors.com



"Ed" <> wrote in message
news:
>
> "NoEd" <> wrote
>
>> I index because I grew tired of being disappointed by active funds
>> that delivered wonderful returns right up until the day I invested.
>
> I bet the idex funds did poorly during that time as well.
>
>> I index because for years I only discovered funds that I should have
>> owned, not that I should own.
>
> This applies to index funds as well.
>
>> I index because I enjoy my free time and have not seen any overall
>> gain from the hours spent analyzing active funds.
>
> Another plus is that if you don't look you won't cry about it.
>
>> I index because it occurred to me that those who argue the strongest
>> for active funds tend to be the same people who benefit the most if I buy
>> active funds.
>
> Dumb.
>
>> I index because I trust indexes more than active managers. Indexes
>> do not get board, get overconfident, quit, die, or defect to other firms.
>
> I disagree. They stay fully invested in bear markets from start to finish.
> That's overconfidence.
>
>> I index because indexes are transparent. I know what my money is
>> invested in and why.
>
> Not if your free time is important to you and you don't look.
>
>> I index to eliminate risk without sacrificing return.
>
> That's just plain rediculous.
>
>> I index because as my assets grow I prefer simplicity to complexity.
>
> Said another way, I have no idea what I'm doing.
>
>> I index because as I get older cost matters more to me.
>
> It should be risk, not cost, that matters most.
>
>> I index because I now realize that all I need is the return of index
>> funds to achieve my financial objectives. And that is what really
>> matters.
>
> Then I hope the next 5 years are kinder to you than the last 5.
>
>

Re: Why I Index

"NoEd" <> wrote in message
news:
> SCOREBOARD:
>
> www.spiva.standardandpoors.com

So? What's your point?

If you're trying to get me to believe that there are many funds that do
worse than the SP500 you don't have to try, I already know that.

I only have one fund in my portfolio that has been there for more than 5
years. PRWCX.

For the 5 years ended 6/30/2005, $100,000 invested in PRWCX would be worth
$189,520.47.
$100,000 invested in VFINX over the same period would be worth $88,245.20.

I would be $101,275.27 richer than someone that held VFINX, but they would
have saved a bunch on expenses.

For 10 years, VFINX averaged 9.87%, since inception (8/31/1976) it averaged
12.12%.
PRWCX, for 10 years 12.68%, since inception (6/30/1986).

This is why I don't index. Risk for my fund was about one thind that of the
Vanguard index fund.

Re: Why I Index

NoEd <>,whose name means "cum-gargling
butchfemme; immature; lies to women", bad mouthed:

> active pillow-biter wants stocky eunuch for in and out. Must have wide
> love gun. Will consider excessive face fucking and rectum pissing for
> the right John-and-Joan. Mail me at

Re: Why I Index

NoEd <>,whose name means "cum-gargling
butchfemme; immature; lies to women", bad mouthed:

> active pillow-biter wants stocky eunuch for in and out. Must have wide
> love gun. Will consider excessive face fucking and rectum pissing for
> the right John-and-Joan. Mail me at

Re: Why I Index

NoEd, <>, the mother-naked, antisocial
prostitute, and tenant of manorial land who pays rent by having
homosexual sex with the landowner, squawked:

> I'v liked dis guy 4 ages, he is 1 year older tha me. When I first saw
> him I fancied him straight away. He knows I like him. Last week I felt
> confident so for the first time I txted him! He txted back askin who i
> was, I told him who I was, he said he didnt know me, and that was it! I
> tried again last nite! but no reply! this mornin however there was 1
> new msg! it was from him telling me 2 f*** off! Doze he love me you
> think?

Re: Why I Index

Gary C.

Get help!


"NoEd" <> wrote in message
news:5wdGe.7853$_%
> NoEd, <>, the mother-naked, antisocial
> prostitute, and tenant of manorial land who pays rent by having homosexual
> sex with the landowner, squawked:
>
> > I'v liked dis guy 4 ages, he is 1 year older tha me. When I first saw
> > him I fancied him straight away. He knows I like him. Last week I felt
> > confident so for the first time I txted him! He txted back askin who i
> > was, I told him who I was, he said he didnt know me, and that was it! I
> > tried again last nite! but no reply! this mornin however there was 1
> > new msg! it was from him telling me 2 f*** off! Doze he love me you
> > think?

Re: Why I Index

"NoEd" <> wrote in message
news:
> Gary C.
>
> Get help!

I'm all right, I don't index.
Thanks anyway.

Re: Why I Index

So did you own this fund for the entire five years and what percentage did
it represent? Remember, I have not made the argument that index funds will
beat all funds, but instead, my arguments are that an index fund has a
higher chance of beating most other funds in the same class mainly due to
lower expenses and that there is no method that can profitably pick funds,
in advance of course, that will beat index funds. This has proven to be
correct.


You will ALWAYS be able, after the fact, to find funds that beat an index.
This means nothing. You've had your chance to prove you can pick funds with
less risk than comparable index funds, but you have chickened out every
time.


"Ed" <> wrote in message
news:
>
> "NoEd" <> wrote in message
> news:
>> SCOREBOARD:
>>
>> www.spiva.standardandpoors.com
>
> So? What's your point?
>
> If you're trying to get me to believe that there are many funds that do
> worse than the SP500 you don't have to try, I already know that.
>
> I only have one fund in my portfolio that has been there for more than 5
> years. PRWCX.
>
> For the 5 years ended 6/30/2005, $100,000 invested in PRWCX would be worth
> $189,520.47.
> $100,000 invested in VFINX over the same period would be worth $88,245.20.
>
> I would be $101,275.27 richer than someone that held VFINX, but they would
> have saved a bunch on expenses.
>
> For 10 years, VFINX averaged 9.87%, since inception (8/31/1976) it
> averaged 12.12%.
> PRWCX, for 10 years 12.68%, since inception (6/30/1986).
>
> This is why I don't index. Risk for my fund was about one thind that of
> the Vanguard index fund.
>

Re: Why I Index

I have owned PRWCX for the last 3+ years and use it as part of my core
portfolio. I also own PRFDX and believe it can beat the index. If
index returns 50%, these two funds will not beat it, but if the indexes
lose money in a particular year, these two funds have more than shown
their style and performance can turn a positive return when the markets
are south of the mendoza line,

Re: Why I Index

"NoEd" <> wrote

> So did you own this fund for the entire five years and what percentage did
> it represent?

I have owned it without interuption since 1991. It hasn't had a down year
since I started buying it. It is our largest investment. We own it in 3
IRA's and elsewhere.

> Remember, I have not made the argument that index funds will beat all
> funds, but instead, my arguments are that an index fund has a higher
> chance of beating most other funds in the same class mainly due to lower
> expenses and that there is no method that can profitably pick funds, in
> advance of course, that will beat index funds. This has proven to be
> correct.

I already said I agree.

> You will ALWAYS be able, after the fact, to find funds that beat an index.
> This means nothing. You've had your chance to prove you can pick funds
> with less risk than comparable index funds, but you have chickened out
> every time.

I have only 'chickened out' because you won't believe what I say. I can't
help you with that.
If you're talking about your contest, I'm not interested. I'm in a contest
and up until yesterday I had 3 portfolios, only one is an entry, the other
two were just for fun. None are in the red or have been this year. I won't
bother to tell you how they're doing other than to say Arne is kicking butt
this year, yours and mine.


inthe.net> wrote in message
> news:
>>
>> "NoEd" <> wrote in message
>> news:
>>> SCOREBOARD:
>>>
>>> www.spiva.standardandpoors.com
>>
>> So? What's your point?
>>
>> If you're trying to get me to believe that there are many funds that do
>> worse than the SP500 you don't have to try, I already know that.
>>
>> I only have one fund in my portfolio that has been there for more than 5
>> years. PRWCX.
>>
>> For the 5 years ended 6/30/2005, $100,000 invested in PRWCX would be
>> worth $189,520.47.
>> $100,000 invested in VFINX over the same period would be worth
>> $88,245.20.
>>
>> I would be $101,275.27 richer than someone that held VFINX, but they
>> would have saved a bunch on expenses.
>>
>> For 10 years, VFINX averaged 9.87%, since inception (8/31/1976) it
>> averaged 12.12%.
>> PRWCX, for 10 years 12.68%, since inception (6/30/1986).
>>
>> This is why I don't index. Risk for my fund was about one thind that of
>> the Vanguard index fund.
>>
>
>

Re: Why I Index

>
> I have only 'chickened out' because you won't believe what I say. I can't
> help you with that.
> If you're talking about your contest, I'm not interested. I'm in a contest
> and up until yesterday I had 3 portfolios, only one is an entry, the other
> two were just for fun. None are in the red or have been this year. I won't
> bother to tell you how they're doing other than to say Arne is kicking butt
> this year, yours and mine.
>
>

I finally managed to pass Arne :) with no trades except my initial buys.
Now I'm wishing I had all the same stocks in real life..

Re: Why I Index

" I index because it occurred to me that those who argue the strongest
for active funds tend to be the same people who benefit the most if I
buy
active funds. "

how do I benefit if you buy the funds I own already?
----------------------------------
" I index because I grew tired of being disappointed by active funds
that delivered wonderful returns right up until the day I invested. "

this is fund selection problem, not a managed fund problem.
-------------------------------------
" I index because I enjoy my free time and have not seen any overall
gain from the hours spent analyzing active funds. "

I analyzed fund companies and individual funds and now spend my time on
board like this, not second guessing my decisions on what funds to buy
-------------------
"I index to eliminate risk without sacrificing return. The high
probability that an active fund will not keep up with its benchmark
adds
uncompensated risk. "

risk is only measured in hindsight, and is something people use to
justify a past decision with a known outcome already. Risk as
financial types call it, is only measured on past performance, which
indexers obviously know is no guarnatee of future results. sounds
oxymoronic to me...
-----------------
" I index because I now realize that all I need is the return of index
funds to achieve my financial objectives. And that is what really
matters. "

I thought the goal of investing was to make money, not get the return
of the index. If investing in the index is all that matters, then ask
someone which invested in Japan when the Nikkea was at its TOP. They
got the return of the index, but they didn't make too much money. If
the return of the index is what matters, then I want a say in what gets
put in the index.

Re: NoEd first time anal

"NoEd" <>, the jingling, tacky lawyer, and callus
scraper to the nobility, divulged:

> crazy buffarilla pines for bitchy dung-puncher for dick-drinking. Must
> have solid love trumpet. Will consider abhorrent bull sessions and
> puckered-gazoo snorting for the right she-male. Mail me at
>

Re: Why I Index

"Ed" <> wrote in message
news:
>
> "NoEd" <> wrote
>
>> So did you own this fund for the entire five years and what percentage
>> did it represent?
>
> I have owned it without interuption since 1991. It hasn't had a down year
> since I started buying it. It is our largest investment. We own it in 3
> IRA's and elsewhere.
>
>> Remember, I have not made the argument that index funds will beat all
>> funds, but instead, my arguments are that an index fund has a higher
>> chance of beating most other funds in the same class mainly due to lower
>> expenses and that there is no method that can profitably pick funds, in
>> advance of course, that will beat index funds. This has proven to be
>> correct.
>
> I already said I agree.
>
>> You will ALWAYS be able, after the fact, to find funds that beat an
>> index. This means nothing. You've had your chance to prove you can pick
>> funds with less risk than comparable index funds, but you have chickened
>> out every time.
>
> I have only 'chickened out' because you won't believe what I say. I can't
> help you with that.
> If you're talking about your contest, I'm not interested. I'm in a contest
> and up until yesterday I had 3 portfolios, only one is an entry, the other
> two were just for fun. None are in the red or have been this year. I won't
> bother to tell you how they're doing other than to say Arne is kicking
> butt this year, yours and mine.

Hopefully he gets some of his money back from prior years.


>
>
> inthe.net> wrote in message
>> news:
>>>
>>> "NoEd" <> wrote in message
>>> news:
>>>> SCOREBOARD:
>>>>
>>>> www.spiva.standardandpoors.com
>>>
>>> So? What's your point?
>>>
>>> If you're trying to get me to believe that there are many funds that do
>>> worse than the SP500 you don't have to try, I already know that.
>>>
>>> I only have one fund in my portfolio that has been there for more than 5
>>> years. PRWCX.
>>>
>>> For the 5 years ended 6/30/2005, $100,000 invested in PRWCX would be
>>> worth $189,520.47.
>>> $100,000 invested in VFINX over the same period would be worth
>>> $88,245.20.
>>>
>>> I would be $101,275.27 richer than someone that held VFINX, but they
>>> would have saved a bunch on expenses.
>>>
>>> For 10 years, VFINX averaged 9.87%, since inception (8/31/1976) it
>>> averaged 12.12%.
>>> PRWCX, for 10 years 12.68%, since inception (6/30/1986).
>>>
>>> This is why I don't index. Risk for my fund was about one thind that of
>>> the Vanguard index fund.
>>>
>>
>>
>
>