The do-nothings out-perform the do-somethings

Posted on April 6th, 2009 in Investing, Tips

Do expertise, experience, and education (the 3 E’s) actually help you make extra money when it comes to investing?

Mark Kritzman of MIT just completed a  20-year study of mutual fund managers from 1/1/89 – 1/31/09.  Despite their 7 –figure salaries, their research staffs, their MBAs and PhDs,  only 3% of these fund managers were able to beat the S&P 500 index over this period.

When one simply buys all the companies in an index like the S & P 500, rather than analyzing which companies to buy, one earns higher returns virtually all the time.

Yes, there’s the possibility of reaching the top 3% if you happen to be lucky enough to pick the right manager.  But if you give up the desire to be in the top 3%, you can virtually guarantee that you will out-perform the average professional.   And then, of course, there’s the peace-of-mind and ease that comes with letting go of anxiety and stress around finances.  That’s a priceless benefit.

Not only does doing (practically) nothing (as in the S & P 500 index) make you more money, but my  Rainbow Portfolio™ takes the S &P  to an even higher level.  This is because the ultra-diversification of the 14 asset categories makes you even more money and lowers your risk.  Check it out in my book.  Or call Abacus for more information:   1-866-558-2372.