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Warren said what? Warren Buffett has THIS Advice for Individual Investors

Apr 30, 2019

Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions
Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions

 

  • Investment guru and CEO of Berkshire Hathaway (BRK.A) Warren Buffett recently appeared in an interview with Yahoo! Finance and had a piece of advice to offer to individual investors.
     
  • All you have to do is just buy a cross-section of America,” said Buffet, who added, “and never listen to people like me or read the papers or do anything subsequently.”
     
  • More specifically, Buffett recommends a simple portfolio comprised of a fund that tracks the S&P 500 and a fund that tracks the Vanguard 500.
     
  • Among the funds we model that track the S&P 500, the Invesco S&P 500 Equal Weight ETF (RSP) is rated as “Best” according to our ETF Smart Beta Scores.
     
  • Buffett challenges naysayers of this strategy to look at historical returns, where S&P 500 index funds consistently outperform most actively managed funds, who specifically aim to beat an index.  
     
  • But in regards to the second part of Buffett’s advice, why tune out investment professionals such as himself? Buffett believes that commentary and advice provided by the investment professionals is simply noise that tempts investors to trade in and out of their positions. And as Buffett so often preaches, just because you can trade, does not mean you should trade. 
     
  • Buffett explains in the interview that literature shows that investors, especially individual investors, are historically terrible at timing the market -- they often buy when they should be selling and sell when they should be buying.
     
  • Buffett concludes by saying, “People have certain habits, some proclivities that are self-destructive in investing. So I would say that I hope our main message is to stay away from trying to trade stocks or do things that are kind of self-destructive, and just let America do the work for ‘em."

 

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