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Even Day Traders Recommend Index Funds
Posted By Matt_SF On 08/27/2009 @ 12:02 pm In Investing | 6 Comments
That’s right! A guy who actively buys and sells stocks is suggesting you should stick with Plain Jane index funds.
Because it’s too difficult for 99% (a completely unscientific statistic) of the general public to outperform the market over an extended period of time.
Every week, at least one person will ask me for a hot stock tip. Almost every single time, I tell them to buy a basic Vanguard S&P 500 index fund. If they keep up the pressure and want something more aggressive, I tell them to buy the Vanguard Small-Cap Index Fund which passively invests in smaller, higher growth, but higher risk companies.
Now, before the pro-index fund, Boglehead crowd showers me with kudos and the pro-trader crowd throws flaming bags of dog crap on my porch, allow me a few moments to debunk the Get Rich Quick by Becoming an Active Trader myth.
Bottom line is that you can probably find better, more profitable things to do with your time. So save yourself the time investment and the money you’ll likely waste on trading commissions. Find something more worthwhile to occupy your entrepreneurial spirit because goodness knows being a full time trader  isn’t exactly a fulfilling career.
And if my reasoning has failed to convince you, maybe some sage advice from the world’s most famous and articulate investor (Warren Buffett) can change your mind. If not, then best of luck to you.
This is a guest post by Matt SF at Steadfast Finances .
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 active traders tool kit: http://www.bargaineering.com/articles/tools-of-an-independent-trader.html
 E*Trade baby: http://www.youtube.com/watch?v=UG4jlJyxRUA
 The Simple Dollar: http://www.thesimpledollar.com/2009/06/15/the-time-cost-of-investing-does-obliviousness-pay-off/
 being a full time trader: http://www.bargaineering.com/articles/a-typical-day-in-life-as-an-independent-trader.html
 Steadfast Finances: http://steadfastfinances.com
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