Indexing: Why Can't Money Managers Beat The Market? Charles Ellis Explains

In a WEALTHTRACK exclusive legendary financial thought leader, Charles Ellis explains why after decades of searching for outstanding money managers he has become a big believer in indexing.
WEALTHTRACK Episode 1850 published on June 9, 2020
More info: wealthtrack.com/legendary-inv...
#CharlesEllis #charlieellis #indexfunds #indexing #indexfund

[@washingtonhwy12wines56]

This is one of my core favorite investing videos of all time. He so clearly points out the times have changed since the baby boomers could find “alpha” through a better broker. I’m taking his and Tony Robbins advice and going to low cost index funds and away from my brokers who skim 1.5% if they win or loose for me. I share this video with my closest friends and family.

[@Notrocketscience101]

You don’t get it! The brokers have always been over paid used car salesman, ripping off customers with bad advice to generate fees. There is a book written in 1940 called. Where are the customers yachts? That’s because they were ripping off people 100 years ago just like they’re ripping them off now. If you want to beat the market, just pay attention to what the majority of experts are telling you to do and do the opposite. Why does this advice work? Because if the average fund manager can’t be at the indexes, obviously, you’ll have to do the opposite of what the people who are losing do.

[@cjdch6604]

Someone great for once. Admits some people can beat but knows vast majority can’t. However I don’t think stocks move any different to 40 years ago.

[@chessdad182]

I just realized this video is from 2020. I have to agree a lot with the idea of indexing. But at times you can get greater returns with a) A bit of luck, b) over-allocating to a sector or theme. The problem is you can get it wrong too. LOL. Fortunes are made and lost going in the opposite direction of the crowd. And human nature being what it is, that behavior is likely to continue for the future.

[@OTDJ1]

great macky👌

[@alanmrsic893]

Great interview, but Mike Green think different, thanks again!

[@dassa0069]

One glaring fault of Indexing in the instant case results in concentration in so called FAANG stocks because of market capitalization. I call them Hobby Stocks because following IRS principles, if an entity does not produce a profit in 2/5 years the IRS reserves the right to disqualify expenses as hobby losses.

[@johngill2853]

The concentration of FAANG stocks is lot less for someone who is more diversified than the S&P 500. If you add small cap, mid cap, international and bonds the concentration goes way down. Holding only large cap US stocks is not diversified

[@dassa0069]

@@johngill2853 Not really.

[@johngill2853]

@@dassa0069 not really? Wouldn't that exactly depend on how much diversification you had away from the S&P 500? If you were simply only 50% S&P 500 instead of 100% that would cut down your concentration by 50%?

[@dassa0069]

@@johngill2853 As stocks in the index go higher more funds are concentrated in them fueled by options manipulation through borrowing and share buybacks. I overstated by mentioning FAANGS due to my abhorrence of those creatures spawned from the swamp of 20 years of Fed excess liquidity, money printing, helicopter money, etc. etc.

[@johngill2853]

@@dassa0069 so your talking stocks in general. And I can't say your definitely wrong because only time will tell. But you believe this is the case for smaller stocks and international stocks? International stocks have been beat down for a while

[@qake2021]

👍👍👍👌👌👌👏👏👏

[@PJBHolden]

Yet money managers make millions of dollars per year

[@romanhryniszak1887]

GD

[@dassa0069]

Indexers will be totally destroyed in this Bear Market. Next Indexing friendly bubble in 20 years. Wait for it!

[@apga1998]

Sorry George, but the data show that indexers will still do better than 75 per cent of active managers, even in bear markets. And one big reason is the cost of the actively managed fund. Good luck!

[@dassa0069]

@@apga1998 We will see as the Bear market takes the Dow down 80% over the near future.

[@johngill2853]

Problem with your statement is all an index is, is a collection of the underlying stocks. It's nothing more or less. You basically get the average return. But long-term you should do better than most because of taxes and fees. Now will stocks perform as expected over the next 20 years, I can't answer that. But what I can tell you if you invest in index funds you will share in whatever they do return.

[@M1kelCccHello]

USA & UK both have huge debts. Stock market could have a large crash whether you are tracking the index or active investor.

[@oppenheim2]

I can’t say this is nonsense, but investing is more complicated than that and varies with every person - their goals, knowledge, experiences, situation in life, etc. Bottom line, listen to such thinking, but think for yourself.