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Subject:  Re: How to finance your FIRE Date:  8/11/2003  12:14 PM
Author:  SloanT Number:  287 of 5276

tdx:I hate to be a party-pooper, but I take umbrage to this statement. Index funds are not only for people who think investing is "boring" or "difficult." I'd spell out what I think, but I've already posted it on another board, so I'll just include the link:

A while back on REHP there was some discussion over the ability of people to beat the market and someone posted a link to a study that found that on average a bunch of people at a certain brokerage over a certain time period had underperformed the market. Here's what I found: In the report, on page 19, there is a very interesting table that reveals that 43.4% of accounts beat the market over the reviewed time period and 25% of accounts beat the market by more than 6% annually, all net of transaction costs. Furthermore, the top 10% of accounts beat the market by over 18% annually, again, net of transaction costs. (From:

I know that you are a student at UVA, one of the top public Universities in the nation. I imagine that you are a pretty good student as well. Why would you settle for average if you have an interest in investing and you have shown that you are certainly in the top half or top quarter or top 10% everywhere else?

My whole life all I hear is how hard the next step is: Calculus is impossible...Mechanical Engineering is so hard...Physics 2 is too hard, take it at CC...Watch out for the Sr. Design class, it's killer...the CFA is impossible, you'll never pass...don't invest actively, you have to be Warren Buffett to beat the market...

I just don't buy it. The reason why most people do poorly at investing is that they treat it like some parlor game where you can set up an account, watch some CNBC, and go for it. If people approached the stock market like they would a career in law or medicine, they would do a whole lot better. In fact, some people do just that and they are the 25% who beat the market by 6% and the 10% who beat the market by 18%.


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