Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: dick_from_chgoo who wrote (22992)	8/3/2006 12:27:04 PM
From: Kirk ©	Read Replies (1) of 42834

I have no objections with what you say. Nobody here has pointed to some other Nobel winners, Fama and French. I'm not going to spend a ton of time to pass shres's muster since he clearly has some personal issues with me to get over, but the work of Fama and French has led to an "improved indexing" which is to say they have "managed index funds" that beat the markets over the long haul. People like our Terminator in Sacramento CA have invested in the "DFA" company because the work shows these "managed index funds" clearly have an edge over Bogle's somewhat managed index funds. Lets not forget that the S&P500 index fund is a MANAGED fund in that the S&P500 selection committee decides what gets added to the index... If they were better managers, or more lucky, they would have added Google to the S&P500 at the IPO rather than after the stock was up a ton. A quick summary says DFA has found a better way to index and they charge a premium to get it. Also, Bogle has a personal pride stake in promoting index funds he helped start and promote. Of course he will say his way is the best. Back in late 1999 and early 2000, people would ask me why I didn't index more and my easy answer was "The index funds have too much Cisco in them for my taste." The point was then that the index funds contained a valuation bubble due to their cap weighting. I believe DFA's approach addresses this and thus, is better. I believe my approach to SELL some of what is up and look for asset classes that add diversity AND are out of favor is another method to beat the standard index funds. Of course the only proof of concept is if I can keep doing it. So far, since Dec 31, 1998, I've been doing it in spades on the books with no hidden trades like Brinker's QQQQ. Could I be lucky rather than good? Of course! But only time will tell. "Those who say it cannot be done should not interrupt the person doing it. “ -- Chinese proverb

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