Blogs & Comment

Quotable guide to passive investing (VII)

Here is Part VII of the Quotable Guide to Passive Investing. Part I is here. To scroll through Parts II to VI, click on links at the bottom of each page.
The Little Book of Safe MoneyJason Zweig
“The keys to investing are simple: diversify, keep costs low, buy and hold.”
“Like dieting, investing is simple but not easy.”
“It is absolutely mandatory for you to keep a reservoir of liquidity in your portfolio at all times.”
“No matter how valuable an investment may be or appear to be, it’s of no practical value to you unless it’s liquid when you need to cash out.”
“The biggest single holding in your portfolio is you: the income that your career will generate over the rest of your life.”
“Anyone whose human capital is vulnerable to the escalating cost of living should consider investing heavily in TIPS.”
“Wall Street is forever inventing another newfangled way to promise higher yield at low risk.”
“In Japan at the end of 1989, the leading Nikkei 225 stock index was at 38,915.87; two decades later, it languishes below 10,000.”
“Invest as if stocks are likely-but not certain-to beat all other assets. Keep some money in bonds, cash, and real estate just in case they do better.”
“Stocks are not certain to outperform bonds and cash no matter how long you hold on.”
“Men should make a special point of having their wives review any choices the husbands regard as a sure thing.”
“It is irresponsible for a husband to keep such tight control of the family’s investments that his wife will find them completely unfamiliar after he is gone.”
“In the stock market, much of what seems to be patterns is, in fact, just random noise.”
“You should never act on an investing idea the same day you get it.”
“Never invest in anything on the recommendation of a friend or family member alone.”
“Commit to a dollar-cost averaging or automatic investment plan that require you to add a little bit of money every month.”
“If you are investing for retirement 30 years away, buy a total stock-market index fund and hold it continuously for the next three decades.”
The Millionaire in YouMichael LeBoeuf
“Money should be invested passively. Passive investing means buying and holding no-load, low-cost index mutual fund with performances reflecting that of entire markets.”
“Don’t waste your time playing the market. Own the Market, live your life and enjoy the journey.”
“Taylor Larimore–summarized the index advantage best: “Index funds offer much more than superior returns. They also provide maximum diversification, no overlap, no style drift, no manager changes, lower turnover, lower expenses, lower taxes, greater simplicity and peace of mind.”
“The master key to wealth can be summed up in just one word: Simplicity.”
“The main reason index investing is so successful is because fewer people have their hands in your pocket.”
“Timing the market is for losers. Time IN the market will get you to the winner’s circle, and you’ll sleep a lot better at night.”
The Only Guide to Alternative InvestmentsLarry Swedroe and Jared Kizer
“Some investment products are so complex in design that it is very difficult, if not impossible, for the average investor to fully understand the risks entailed and the costs incurred.”
“When considering an asset class for inclusion in a portfolio, — investors need to consider the diversification benefit of the investment.”
“Recency is the tendency to give too much weight to recent experience, while ignoring the lessons of long-term historical evidence.”
“The evidence from academic studies demonstrates that equity REITs, both domestic and international, offer an attractive risk/return trade-off” and provide meaningful diversification benefits to portfolios.”
“The bottom line is that investors should consider devoting at least some significant portion of their fixed-income allocation to inflation-protected securities.”
” “Only informed and disciplined investors should consider including commodities in their portfolio.”
“Unless they are highly risk-averse, investors should probably not buy an immediate fixed annuity until approaching age eighty.”
“Despite its low correlation with other portfolio assets, high-yield debt provides almost no unique benefit in terms of portfolio diversification.”
“In times of crisis, the markets for illiquid assets can virtually dry up.”
“For most investors the only way to obtain sufficient diversification of the risks of investing in speculative securities is through a mutual fund.”
“After ten years the survival rate of private firms was only about 34%.” (2002 study)
“Private equity investors forgo the benefits of liquidity, transparency, broad diversification, and the access to daily pricing that mutual fund investors enjoy.”
“Understanding the difficulty of identifying superior hedge-fund, venture-capital, and leveraged-buyout investments leads to the conclusion that hurdles for casual investors stand insurmountably high.”
“While preferred stocks offer relatively high yields, in general, they possess enough negative attributes to make them inappropriate choices for individual investors.”
“One of the rules of prudent investing is to avoid complex securities because the complexity is likely to favor the issuer.”
“The bottom line on hedge funds is this: They are ‘sinkholes’ for investors.”
“Variable annuities are products that are sold, not bought.”
“Variable annuities (VA) convert what would otherwise be long-term capital gains into ordinary income.”
“Education, or a good fee-only advisor who is not influenced by commission-based compensation, can be the armor that protects investors.”
To be continued . here.