It is nearly impossible for active managers to beat the market over the long term after taking management expenses, transaction fees, taxes, and risk into account. Individual investors don’t have the time or resources to compete with institutional investors. The only rational path for individual investors is to invest in passively managed index funds. Continue reading Investing for Retirement: Actively Managed Investing
How can the financial markets be simultaneously both efficient and, occasionally, investors behave so irrationally? How is it possible for speculative bubbles to form? In the first week of a microeconomics course, college students are taught about supply, demand, and equilibrium pricing. For every investor buying a stock, betting that it will go up from a particular price per share, another investor is selling the stock, essentially making the opposite bet. Or, more likely, a computer algorithm. Continue reading Investing for Retirement: Financial Market Efficiency
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