Index Funds

“Active managers are paid to add value over what can be earned at low cost from passive investing, and failure to do that is failure”

“Passive management does not give investors the return of the index; it gives them the return of the index less costs. So, the longer they have their money passively managed, the greater their underperformance will be relative to the index.”

“Money managers are not stupid. They realize that sticking one’s neck out and producing short-term under performance that differs from an index that is used as the benchmark is risky.”

“Analysts generally regard the stock market as the passive reflection of investors’ expectations. But in fact, it is an active force in shaping them.”

“Investing is a funny business. It’s really easy to be average. Just buy an index fund. It’s really hard to be above average.”

“On average, the average large-stock fund manager produces average returns before fees and below-average returns after fees. So compared with after-fee returns, an index fund is superior.”

“Patience is not passive — it is disciplined.”

“Performance measurers seek benchmarks the way bees seek honey.”

“The long run is a benchmark that helps us to understand the short run, where nothing ever stands still.”

“The thesis underlying everything, whether you’re an actively managed fund or a passive fund, is that the U.S. will be OK. If you don’t believe that, you shouldn’t be in the stock market.”

“I always look for red flags. My major red flag all the time is when long governments yield 600 basis points over the yield on the S&P 500. At that point, stocks have always been overpriced.”

“All you have to do, really, is find the best hundred stocks in the S&P 500 and find another few hundred outside the S&P 500, to beat the market.”