According to Morningstar data, last year the average S&P 500 fund missed by the amount of their expense ratios plus an additional 0.38%, or 38 basis points (one basis point is 1/100th of a percent)
That doesn't seem all that bad to me, but Vanguard seems to claim that they stay within 5 basis points, which is a lot better.
I did some research on index funds a while ago, and it does seem that individuals who invest in index funds do substantially worse than the index funds themselves, because they buy into the funds during bull markets and sell on the dips. But people who buy and hold index funds for the long haul return close to the same as the fund itself.
Today's post, Investing for the Long Slump was originally published on 22 January 2009. A summary (taken from the LW wiki):
Discuss the post here (rather than in the comments to the original post).
This post is part of the Rerunning the Sequences series, where we'll be going through Eliezer Yudkowsky's old posts in order so that people who are interested can (re-)read and discuss them. The previous post was Failed Utopia #4-2, and you can use the sequence_reruns tag or rss feed to follow the rest of the series.
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