Weekend Reading – Indexing is too big, stock buys, giveaways and more

Welcome to my latest Weekend Reading edition.  I found some great articles this week from the blogosphere but before you read that list make sure you check out my recent articles. 🙂

Read here about my own case study, realizing a capital loss to offset some capital gains.

Thanks to this passionate index-investor, we got some advice about making our portfolios safer and better.

Enjoy the rest of the best and see you here again next week when I will share some of my personal finance ah-ha moments.

Vanguard Canada wrote about indexing getting too big.  Remember one of the tenets of indexing, it’s a zero-sum game so for every investing dollar that outperforms the market there must be another investing dollar that underperforms it.  Maybe indexing will be popular enough at some point to drive active investors out of the market but I simply don’t see that happening anytime soon; we are nowhere near a tipping point.

The Dividend Guy thinks Wal-Mart is a buy.

Stephen Weyman is giving away $1000 cash here!  Geez, Merry Christmas!

Here is a sad story about how NHL Blue Jackets’ defenseman Jack Johnson got cleaned out of millions of dollars, by his parents.

Sheryl  Smolkin asked if you will decide your retirement date.

Dan Bortolotti answered this reader question about bond ETFs in taxable accounts.

According to a recent Globe and Mail article here is where the “smart money” is going, into stocks like:  Wells Fargo, Microsoft, Cisco, Abbott, Clorox and Kinder Morgan Inc.  I would think the “smart money” would be moving into Canadian oil and gas stocks soon.

Tweet of the week:

Tweet of the week

Young & Thrifty shared her net worth update.

The Blunt Bean Counter and I were on the same wavelength this week, regarding tax loss selling.  His article was excellent.

Big Cajun Man wrote about TFSA retirement welfare bums.

Michael James on Money reviewed a new book by John Robertson called The Value of SimpleI just finished reading this book myself and I have the same high praise for the author.  You can find another giveaway courtesy of Nelson Smith’s review here.

Freedom Thirty Five Blog said the past can help the future you.  Absolutely true.

Dan wrote about some year-end tax tips.

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31 Responses to "Weekend Reading – Indexing is too big, stock buys, giveaways and more"

  1. Whether indexing is too big depends on your perspective. If you’re a trader who wishes there were more dumb traders to trade against, then indexing is too big. If you sell expensive actively-managed mutual funds, then indexing is too big. Thanks for the mention.

    Reply
    1. I don’t think indexing is too big, nor will it get too big, because I think there will always be some level of active management which can be done at a modest cost. I look at fundamental funds or ETFs as examples, although I suppose you could say these are “smart indexing” strategies. This is just a guess of course, I have no idea how investing might change over time 🙂

      Enjoy the weekend.

      Reply
  2. Very nice list, thanks for sharing. I read the article about Jack Johnson earlier in the week. It is a very sad stroy. Hopefully he can find a way out of this situation. I’m pulling for him!

    Have a Happy Thanksgiving and enjoy your weekend!

    Bert, One of the Dividend Diplomats

    Reply
  3. Even if index investing gets to be too big, the fact remains that half of all active investors will under-perform it. There’s no easy way to beat the index. But even if that were to happen, long-term investors would see a lot less volatility since the true value of corporate earnings will power their returns over several decades.

    Reply
    1. There’s no easy way to beat the index, agreed. I can’t help but think some people will always try though! I suppose any attempt at stock picking and holding, is an attempt at that. I’ve learned this. True value does come out in the long-term.

      Reply
    2. Actually, far fewer than half of active investors will underperform the index. The main reason is costs. But another reason is the skewness of the distribution of returns measured in dollars. Many underperform by a little and a few who outperform by a lot.

      Reply
  4. Thanks for the inclusion this week, I have an uplifiting story about an NFL player refusing his family’s financial requests, glad to see some young men, stepping up too. Have a great weekend.

    Reply
  5. Interesting argument on indexing, but I don’t really get it.

    I thought that people beat the market due to other people under-performing the market. However, the performance of the actual market is based on the performance of the underlying companies isn’t it?

    I’m more than willing to let the active investors fight amongst themselves for to beat, or get beaten by, the market by a few percentage points. I’d much rather index and save myself a lot of time and effort and simply perform equal to the market.

    Reply
    1. People beat the market for a number of reasons but with indexing as you likely know:
      -It’s a zero sum game
      -After fees and trading costs, active money management will rarely beat the index
      -The market does perform based on the underlying companies but it’s nearly impossible to pick the top stars from the top dogs in any given year
      -Investing can provoke strong emotions, so indexing removes that hindrance.

      I think you’re wise to index invest.

      Reply

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