Active investment still has some active defenders, And digging into the reasons for active funds’ persistent problems, it is easy to see why. Despite the claims of the Efficient Market Hypothesis (EMH) that it is impossible to beat the market other than by luck, it appears that an impressive number of managers do achieve the feat.
The problem is that they do not manage to beat the index by enough to be able to pay themselves and still pass on a decent performance to their clients. In other words, to quote Jack Bogle, the founder of Vanguard and the spiritual father of index investing, the case for passive investing rests on the CMH (Cost Matters Hypothesis), not the EMH. Continue reading “Mutual Funds : The Cost Matter Hypothesis”
This is a nice summary of the flaws in many mutual funds published on Market Watch. Too many mutual funds are simply index funds disguised as something else. And most of the rest are simply attempts to market a product that isn’t designed to actually add value (but sounds fancy enough to accumulate assets). If you missed John Bogle’s discussion on the flaws in the mutual fund industry you should watch it here.
The 10 things via MarketWatch:
1. “Cheap funds often outperform pricey ones.”
2. “We can’t beat the market.”
3. “When skill fails, we just double (or quintuple) our odds.”
4. “People aren’t buying our product…” Continue reading “10 Things that MUTUAL FUNDS Don’t share with you”
One of my good friend asked why gold is falling ? Before responding I have 2 assumptions in mind :-
- Gold investing is purely psychological. There is no real value in gold, other than its value as a conductor in electronics, etc. So all gold investing is pure game theory, its purely something that has no meaning, into which the only reason to invest is the belief that other people will do the same, for no reason other than their belief that other people will do the same…
- Gold obtains valuation through a multitude of factors: scarcity, comparative value,
Continue reading “Why Gold Is Falling”
In our last few posts we have talked a lot about simple derivatives with their detailed structure and the different approaches, they have towards market. Going onward, we will be discussing another complex form of derivatives known as structured derivative products. We will take up these products one by one separately in detail, within our new series of posts “School-To-College”.
In today`s post, we would be discussing what structured derivatives are all about, Continue reading “Structured Derivative: School-To-College”
Its is just the beginning of the year 2013 and many of you would start investing and many would recheck their portfolios just a human tendency . The field of behavioral finance has helped us to understand that we don’t always make rational investment decisions. We often make poor decisions because of our biases. And the designers of structured product are well aware of these “flaws” in investor behavior. So they structure products that exploit our flaws.
Few points to be taken in to account :-