An Analogy

Pictured to the left is a batch of chocolate chip cookies I made yesterday. I don’t think I’ve ever mentioned this on the blog before but apparently I bake a hell of a cookie, seriously. This and barbecuing is as far as it goes but by many accounts the cookies are very good. The key to them turning out, as I will tell anyone who asks, is that I follow the recipe exactly as written, the recipe came from a bag of Ghirardelli chocolate chips from Costco many years ago. The recipe is simple and has a track record for success. Given the track record I am not inclined to mess with it or think I can outsmart the recipe with a little more sugar or a little less flour or whatever. I think there is an investing analogy in there somewhere. If you see it, great if not the recipe is on the bag of chips and if I can make them, anyone can. Happy New...

An Analogy

Pictured to the left is a batch of chocolate chip cookies I made yesterday. I don’t think I’ve ever mentioned this on the blog before but apparently I bake a hell of a cookie, seriously. This and barbecuing is as far as it goes but by many accounts the cookies are very good. The key to them turning out, as I will tell anyone who asks, is that I follow the recipe exactly as written, the recipe came from a bag of Ghirardelli chocolate chips from Costco many years ago. The recipe is simple and has a track record for success. Given the track record I am not inclined to mess with it or think I can outsmart the recipe with a little more sugar or a little less flour or whatever. I think there is an investing analogy in there somewhere. If you see it, great if not the recipe is on the bag of chips and if I can make them, anyone can. Happy New...

Are We A Nation Of Wusses?

Yesterday CNBC had a segment about ETFs during its show Power Lunch that started with a snippet from Jack Bogle saying “they’ve corrupted it (ETFs) into a trading business. You can trade all day long in real time, that’s the tag line Tyler (Mathisen), to which I would ask what kind of a nut would want to do that?” Um, what kind of nut when able to choose, would prefer the more restrictive wrapper, that being traditional mutual funds? Bogle likes VTI and SPY to buy and hold forever but the assertion that ETFs are bad because they can be traded is ludicrous. As mentioned before he is really attacking human behavior not the product. A couple of years ago Dylan Ratigan was going to interview Bogle and of course this same line of thought was coming so I emailed Dylan before the interview and pointed out that this is really about human nature, by coincidence or not Ratigan asked Bogle about this on the air and Bogle sort of conceded the point. ETFs are just a tool. I promise you that people in the past have misused every single tool in existence and will do so in the future. The rest of yesterday’s CNBC segment focused on elementary discussions about potential adverse complexities with commodity based products, funds where the components are thinly traded and so on. It became a reminder (for people somewhat familiar with ETFs) or an introductory point that you need to do homework, look under the hood and understand the dynamics relevant to the fund. So telling people they had to do work. On...