P/S/A: There are single sentences which can create life-changing amounts of difference.
- P/S/A: If you're not sure whether or not you've ever had an orgasm, it means you haven't had one, a condition known as primary anorgasmia which is 90% treatable by cognitive-behavioral therapy.
- P/S/A: The people telling you to expect above-trend inflation when the Federal Reserve started printing money a few years back, disagreed with the market forecasts, disagreed with standard economics, turned out to be actually wrong in reality, and were wrong for reasonably fundamental reasons so don't buy gold when they tell you to.
- P/S/A: There are many many more submissive/masochistic men in the world than there are dominant/sadistic women, so if you are a woman who feels a strong temptation to command men and inflict pain on them, and you want a large harem of men serving your every need, it will suffice to state this fact anywhere on the Internet and you will have fifty applications by the next morning.
- P/S/A: Most of the personal-finance-advice industry is parasitic and/or self-deluded, and it's generally agreed on by economic theory and experimental measurement that an index fund will deliver the best returns you can get without huge amounts of effort.
- P/S/A: If you are smart and underemployed, you can very quickly check to see if you are a natural computer programmer by pulling up a page of Python source code and seeing whether it looks like it makes natural sense, and if this is the case you can teach yourself to program very quickly and get a much higher-paying job even without formal credentials.
My interpretation of this comment is that you're not asking an object-level question of me (why I think value investing is better for the modern American individual investor than technical analysis, for example) but the meta question of why I think that some investment strategies are better than other investment strategies. I'm afraid I don't find that question interesting enough to give it a good answer, and I don't think you would find a quick answer satisfying.
Are you making the comment that "market capitalization-weighted average returns on stocks" would have been more accurate than "average return on capital", or what am I missing here?
I used my judgment and publicly available information. You might be interested in this speech by Munger, this short summary of highlights from him, this book. I've mostly linked to Munger, since I've found his writings on rationality to be more useful, but any biography of Buffett will clarify the link between the two, and Buffett's letters will make obvious that he thinks in similar ways.
I should comment that I think a critical part of Buffett's approach is the "only invest in sure deals" component, which I don't think is a widely followed rule in value investment as a whole.
Re arithmetic mean: an "average" return presupposes some set that you're averaging. It could be the set of all investors (or the set of US investors, or the set of retail investors, etc.). It could be the set of all investments (or the set of US equties, or mutual funds, etc.). I don't understand how investing in an index fund provides "average" returns.
If, by any chance, you mean that an investment in a portfolio of securities provides a weighted average of the returns of the assets included in the portfolio, why, this is a property of... (read more)