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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: Justa Werkenstiff who wrote (388)4/29/1997 10:53:00 PM
From: David Bogdanoff   of 42834
 
BB has often concurred with callers who wanted to invest in an index fund and has recently suggested that listeners who want to take advantage of the gift horse buying opp and who don't have any better ideas could do so buy buying the averagesd via "spiders" or an index fund and has discussed the pros and cons of each method (there's not much difference according to BB).

Managed funds have an advantage in a bear market because they are never fully invested and thus what they hold in cash escapes the ravages of a declining market; conversely in a bull market the cash they hold does not participate in the general rise and they are behind for that. And of course managed funds are forever handicapped because of management fees, operating costs, trading costs, and taxation on realized capital gains which index funds largely or wholly escape.
I am aware of at least one Nobel prize winning economist at Stanford who is on record as saying that managed funds can never beat the market as a group because they are so dominant that they are the market. He says that it would not be possible to distinguish lucky fund managers from truly talented ones in time to take advantage of their talent.

Anyway, compared to some of the now discredited market gurus who have appeared in the financial skies in times past, BB looks pretty open minded. Its not a profession that attracts and keeps the indecisive, faint of heart, and self-flagellating personalities.

David
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