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Weekend reading: A collection of quotes about index investing

Good reads from around the Web.

Most of us know passive investing in index funds is the best way forward for the vast majority (even if some of us continue to pick stocks [1] for kicks, or just out of sheer pigheadedness…)

Passive investing is the least effort and the lowest cost way to invest, and yet it’s also the most likely to deliver nearest to the market’s long-term returns.

However there’s a snag, which is that there are not hundreds of inspiring passive investing books out there filled with witty one-liners.

Active investors can turn to Warren Buffett quipping about being like an over-sexed guy in a harem in a bear market, or Peter Lunch warning that you should invest in companies that any idiot can run, because “sooner or later, any idiot will run it”.

Passive investors? They have Vanguard literature boasting of a 0.01% cut in annual charges.

Oh, and Smarter Investing [2] by Tim Hale, which I’ve almost come to blows over with my co-blogger.

While I agree his Best Book Ever is the number one route map for UK passive investors, I’ve never managed to read more than three pages without dozing off.

Get a quote

I’m biased, but I’ll add that my co-blogger, The Accumulator, is slowly amassing a nice collection of witticism about index investing. Perhaps one day they’ll be collated by a fan overburdened with time for future generations to enjoy.

Until then we can turn to the American Enterprise Institute [3]. It sounds like a spoof corporation from a 1970s dystopian movie, but the Institute gets a thumbs-up for bringing this quote to my attention:

“Building a portfolio around index funds isn’t really settling for the average. It’s just refusing to believe in magic.” – Bethany McLean of Fortune

I also liked this one:

“I own last year’s top performing funds. Unfortunately, I bought them this year.”– Anonymous

There’s even one from the aforementioned stockpicking legend, Peter Lynch:

Thereʹs something to be said for the dart‐board method of investing: buy the whole dart board.” – Peter Lynch, Fidelity Magellan

However the list is not comprehensive, and it does boast a few bore-fests. For example they missed a trick by not including this quote from the master:

“By periodically investing in an index fund, the know-nothing investors can actually outperform most investment professionals.” – Warren Buffett

Perhaps we should do our own roundup of insights about index funds someday, with a focus on the snappy. Having such quotes to hand is not just for fun – distilled wisdom can be a useful touchstone in a tight spot.

Know any great one-liners about passive investing? Please share them in the comments below.

Note: Occasional Monevator contributor Lars Kroijer is on Moneybox this morning! You’ll be able to listen again to his discussion about low cost investing on the radio show’s webpage [4].

From the blogs

Making good use of the things that we find…

Passive investing

Active investing

Other articles

Product of the week: Mortgage rates are creeping up from the bargain basement as the markets start to price in an interest rate hike, says The Telegraph [21]. All the same, you’ll still only pay 1.58% for a two-year fix with the West Bromwich Building Society [22]. That’s below inflation.

Mainstream media money

Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1 [23]

Passive investing

Active investing

Other stuff worth reading

Book of the week: Richard Beddard [38] flagged up Excess Returns [39], a new book comparing and contrasting the investment gains achieved by the likes of David Einhorn, Prem Watsa, Anthony Bolton, and of course Buffett and Co. Anyone read it? Please give us a review in the comments below.

Like these links? Subscribe [40] to get them every week!

  1. Reader Ken notes that: “FT articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.” [ [44]]