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February 21, 2009


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Good perspective. Thanks for the post. Shorts have a place not only as option "insurance" but also as hedges. "Past performance is not a guarantee of future results" applies not only to mutual funds going up in the future but to the entirety of the market. Buy and hold has long been a tenant of good personal finance as the stock market has proven returns superior to bonds, gold, and even real estate, but this trend will not necessarily continue. In fact the more people buy into that tenant (and most of the personal investing community has), the less likely it will remain true.

I think your assessment that millions of people working for publicly traded companies have their interests aligned with shareholders is a powerful concept. I find that not to be true, though, as we have seen in bold, stark terms in the last 18 months. People at some of these companies have made absurd amounts of money while thumbing their noses at "sucker" investors. This is part of the problem with the markets right now--Investors are unwilling to risk their money because they don't trust the people working in the companies to look out for investor interests. In a better world, employee and shareholder interests would be more congruent.

Another good one from Marotta.


On a related note, index funds win again:

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