With the market recovering, assorted PF bloggers are getting into the details of stock investing. They all have some system that they think is going to beat the market. Most of these systems take a lot of time, but they say the time expense is worth it if they can make higher returns than the market.
On average, once fees and transaction costs are considered, people who try to actively manage their portfolios make LESS than people who just stick money in diversified target-date funds and sit.
That means that the majority of people who sink time in with whatever system they’re following are making less money in the market than the people who just set and forget. On top of that, they’re making less money than they would be if they were spending that time doing something that actually earns money. (Cynically, some of these folks are getting advertising $ from their blogs for misleading people into becoming active investors.)
What can you control:
1. The amount of money you put in
2. The diversification mix of your portfolio
3. The fees you pay
What can’t you control:
1. Market returns
2. The random walk down WallStreet
And what you might have difficulty controlling:
1. Man’s (and to a much lesser extent, according to Greg O’Dean, Woman’s) tendency to trade too much and at exactly the wrong times
If you want to invest like Buffett, then buy some Berkshire Hathaway funds.
Even better, pick a target date and buy a Vanguard Target-date fund. (If you’re not sure about when you’re going to retire, pick a late date.)