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yakers

I Don't Know And I Don't Care

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I saw this excelent article by Jason Zweig, a major financial writer. It seems particularly appropriate for educators and those who want to invest sensibly and get on with the rest of their lives:

 

 

http://money.cnn.com/2001/08/29/investing/Zweig/

 

Great article, Yakers. Here is a nice quotation:

 

"With an index fund, you're on permanent auto-pilot: you will always get what the market is willing to give, no more and no less. By enabling me to say "I don't know, and I don't care," my index fund has liberated me from the feeling that I need to forecast what the market is about to do. That gives me more time and mental energy for the important things in life, like playing with my kids and working in my garden."

 

Yep, I'm done trying to figure out which fund managers will outperform the market. I don't know, and I don't care.

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Wow. As educators, what do we say to students when we are trying to teach them valuable lessons about our subject matter or about life, and their response is "I don't know and I don't care, I'd rather just hang with my friends"? Because if you substitute "working in my garden" for "hanging with my friends," that seems to be what you're espousing here.

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FT,

 

Your analogy doesn't hold. We are not losing anything by giving up on active management and forecasting, we are gaining something. With education, if someone says they don't care, they are losing out on something.

 

ScottyD

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FT,

 

I teach my students to work hard, but to work efficiently. I teach them the importance of achievement.

 

This is perfectly consistent with investing in a diversified portfolio of low cost index funds. It does take some work to invest in this manner, but it is an efficient way to outperform the vast majority of actively managed portfolios.

 

The "I don't know and I don't care" expression is merely a bit of tongue in cheek.

 

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FT,

 

Your analogy doesn't hold. We are not losing anything by giving up on active management and forecasting, we are gaining something. With education, if someone says they don't care, they are losing out on something.

 

ScottyD

 

 

This is only true if you accept as fact that it's impossible (or not worth the effort) to actively manage a portfolio. Once it was demonstrated to me that it was possible to outperform the markets with discerning investments, I rejected the notion that it's "gaining" something to settle for market averages. Obviously, your mileage may vary. Not everyone is as interested in this as I am, and for those not so inclined, market averages are indeed better than trusting someone ELSE to actively manage your money.

 

 

FT,

 

I teach my students to work hard, but to work efficiently. I teach them the importance of achievement.

 

This is perfectly consistent with investing in a diversified portfolio of low cost index funds. It does take some work to invest in this manner, but it is an efficient way to outperform the vast majority of actively managed portfolios.

 

The "I don't know and I don't care" expression is merely a bit of tongue in cheek.

 

 

I think that your lessons of hard work, efficiency and achievement are well represented by what you write here. I guess I'm just reacting (overreacting, perhaps) to the "I don't know and I don't care," which rubs me the wrong way no matter the context in which I hear it.

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