PROOF POINTS™:
a continuing diary of commentary and news for Holland Portfolio investors

–>  A Tale of Twenty Four Hours: why active investing stimulates the sale of antacids … but not consistent returns
–>  Consumer Reports study shows stock-pickers beat the S & P 500 only 9% of the time
–>  How Newton the investor discovered a fourth Law of Motion: "… returns decrease as motion (trading) increases."
–>  Schwab on diversification
–>  Swensen on diversification, indexing, myths
–>  Clements: "What counts is commitment."
–>  Older is wiser?
–>  Active Management
falls "flat"

–>  Proof Points™ Archive

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Consumer Reports study shows stock-pickers
beat the S & P 500 only 9% of the time
[Download Printable Proof PointTM]

Big gains grab big headlines; so do horrendous losses. Is a well-allocated, custom-index portfolio (such as a Holland Portfolio) the only proven way to achieve consistent returns?

You already know our opinion, backed by years of successful results. Here is a supporting viewpoint:

The respected Consumer Reports magazine conducted its own investigation and found the allure of active investing to be dangerously overblown. "Most mutual fund investors dream of 'beating the market,'" said CR in a recent cover story. But the odds are slim.

"With more than 5,000 funds to choose from," the story said, "there's no way you can be absolutely certain you're picking tomorrow's market superstar. Worse, you could be picking (tomorrow's) lemon."

CR examined a Morningstar database of 70 actively managed, large cap "blend" funds whose benchmark is the S & P 500 (also the benchmark for Holland Portfolios). Over a five-year time frame, "the stock pickers beat the S & P 500 in just 9% of cases."

Making matters worse for active investors: the proportionately higher fees paid to actively-managed funds. CR quoted investment-industry legend John Bogle: "trying to beat the stock market is (already) a zero-sum game. But when you (consider) the costs, it's a loser's game."

Under the headline "All Index, All The Time," CR recommended investors take a longer-term view of their finances, their goals, their options … and look into a successful custom-index portfolio for a sizeable portion of their investments.