So many of the "Value players" don't even truly understand Warren's Hedge Fund. How many components of the "lazy portfolio" use dynamic hedging with options to mitigate risk? Most value players remark, "We don't use options, they are risky".

A "Religion of Investing" is an accurate characterization of the Lazy strategy.

Sometimes when they say something over and over, they start to believe their own nonsense.

They cannot be reasoned with as they are more concerned with the idea that they have something they can hold on to , over the logic and reality. It is like a Religion of Investing. There is no need for proof because Warren said so…

Andrew

He obviously "forgot" to mention the entire text:

"A simple list of the top 25 highest yield stocks from the S&P 500. It is a good time to look for deep value and many of the names produced by these types of screens will provide just that. Be careful not to fall into the trap of chasing yield as that is a sure-fire way of losing hard earned capital.

Look at the list as a starting point for more research.

Finally, with the markets showing great headwinds in front of it, many of the names toward the top of the list may need to be reviewed from a debt and capital standpoint. Make sure the none of these are overburdened with debt as it could become a problem for the dividend into the future."

What about the dozens and dozens of posts on shorting names like LEHMAN, CITI, CROX, Under Armour, Sears, MasterCard, NY Munis, and the list goes on. MANY ling ideas that worked. too in this bad environment. Or how about the 14% gain since August at Strategy Lab? HELLO?

And even if we bought all of the stocks in that early 2008 post ( which of course was not the case as it was simply an idea generator) we would have used simple sell disciplines to ensure losses were limitied. Paul, maybe you should look up "stop-loss" as a tool to limit trade. By the way what are your sell disciplines.. Ot does LAZY also mean that you never sell?

You are now showing your lack of knowledge and complete ignorance of investing. Have you seen my online portfolio MSN? Or were you too lazy to do anything more that try to find something to poke?

You should not be giving investment advice… You are not qualified…are you? What is your training? Are you registered as an investment advisor? Why should we listen to you? If lazy is the best way, who needs you? Just plunk money into Vanguard funds and be done with it.

I am not going to waste time on this. You are obviously not thinking clearly. Best of luck.

Andrew

I work for a large brokerage firm…actually what may be the largest (for now), but we won't name it. I fully understand what they are saying. It truly is a challenge to trade across “all of those accounts.” It gets even more difficult if you are going to use limits and options. And what is worse, even if they go through the extra effort to be a more active trader, there is a possibility they will under-perform in many market cycles. That’s why most advisors, and lazy investors settle for “good enough” and not the best we can do. They err on the side minimizing their mistakes rather than maximizing their value.

While I wish it were not so, the truth is that a financial advisor is #1 a sales person and #2 a financial manager. This does not mean that they don’t add value. I just think that it is a shame that all of the firms would prefer a salesman over a top notch financial manager. Unfortunately this is the way of the business and I struggle each and every day to differentiate myself from the masses. At least this person from the LARGE financial planning firm was trying to do more than just throw everyone into index annuities that paid outrageous upfront commissions. Yes, I agree that there are much better options than buy and hold advisors, but there are certainly much worse options. What’s worse, in the majority of cases, even if you were able to find an advisor who is more than buy and hold, there is a high probability that you won’t meet their minimums or they will already be maxed out with clients. Unless something changes with the way I can trade across accounts, I’m limiting myself to about 100 relationships and if you think that a < $1,000,000 person will peak my interest, then you are mistaken. Where does that leave the people who truly need the guidance of a professional? It is a shame.

In summary, people who are willing to dedicate the time and effort to educate themselves and follow a discipline, can do a very good job on their own. The problem is that the masses are not willing/able to do this. (I see it every day and I’m sure you do too) I don’t fault them for it. Even as a very highly educated person in the financial industry, I do many things in my own portfolio that I would never allow my clients to do. The best answer is not easy and the easy answer is now best.

I hope that this rambling at least made some sense and that the last glass of wine did not blur my point (if there was one). Your podcast and blog are well done and very informative. I enjoy hearing your (strong) opinions. Investors need to educate themselves and understand their options. You are doing a service to many people.

Mark

Marc:

You know.. I had a heated discussion with someone today. They worked for a LARGE financial planning firm that subscribes to an asset allocation modeling process. As I said, it got heated. When I brought them to the point of explaining how it was different from market timing ( or not) and why , why, why…They blurted out that ( the reason they buy and hold a group of no-load mutual funds” “ it is easier to do, no way we could handle trading with all of those accounts.” Jaw dropped and all I could say was: UH…..WOW…

What does that say?

Andrew

I personally look at the topic this way:

Lazy portfolios help people track a blended portfolio of market indexes. With historical data and statistics, you are able to reasonably determine the probability of achieving a given return over a significantly long period of time. The calculated probability can assist in the financial planning for life events such as retirement. Lazy portfolios are certainly an option for investors; I just don’t agree that they are the best option. In the end, education and discipline will beat out laziness, greed or fear.

Mark

I achieved pretty solid (positive) returns over the past few years in up and down markets. I certainly don't try and compare my performance to benchmarks. As a retail trader I have many advantages over the "pros". The ability to be 100% in cash, the ability to take a small percentage of capital to speculate, or a larger percentage to take advantage of a market dislocation. And to be sure the market is not always efficient. The retail can exploit opportunity by MARKET TIMING. The idea of Market Timing is spoken of as a dirty word by the institutions. They say it is impossible. Well perhaps it is for them. I imagine if I had to manage a few billion dollars and establish multi-million share positions it would be impossible to market time. Fortunately I have few 6-figure accts, and it is much easier to maneuver.

The idea that "lazy portfolios" win in the long run is debatable. What do you consider winning? To me, 8-10% a year is NOT winning. That figure is given via a market benchmark used by an institution. Different markets require different strategies. The "lazy portfolio" and diversification DOES NOT work when we are de-leveraging, especially from 30-40x leverage.

The idea of LAZY and making money is a marketing gimmick. People who want something for nothing, deserve nothing.

:-)

Andrew

Good try. Unfortunately statistics do not spend. But if you are content with losing and have no plans ( or understanding how ) to hedge and protect, then I agree with you . For me and my clients , we like making money.

With respect… when you are ready to look objectively at something let me know . Have you looked at our strategy lab portfolio I'd the returns for TDI last year? Even if we stay in cash for the next 5 years, lazy prtfolios will still be behind.

Tell me, if iFA was not sponsoring you, would you talk another game?

What you do is really damaging as you really believe that you do not face to work to make money in investments .. It worked in expansion phase,,,, not always

Shall I have people send you comments on how much money we gave made then from blog, podcast and portfolios over past few years.

Please do not Pretend to speak with authority in this subject, it was fun listening to silly idea of indexing for a while, but 40% loss is nothing to be proud of

Andrew

I'm perplexed that anyone would pick stocks when it is shown that they end up losing to the market. Not only by poorly placed trades, but also in spending time, energy, fees, commissions, tax consequences, and bid/ask spreads. Lazy Portfolios win in the long run my friend. How can one prove otherwise?

The Lazy Investor gets what he deserves.