I thought for a while now that democracy would work in a country only if people of that country are educated. Thats my justification for democracy not working in a few countries (free electricity or a film star or an extremist organization would win an election).
In retrospect, I think democracy itself is a problem. It has nothing to do with the literacy of the people. It has everything to do with short term popularity - It has striking relations to stock market. People would not vote on long term thoughtful position on an issue, but on what the news snippet is that week, the same way most people would not buy a stock on long term but on a short term news snippet.
At the end of the day, both free elections and stock market are like a popuilarity contest. Whoever lines in with the most popular trend of the day wins for the day, however they lose it in the long run.
Semi dictator ship in China, Singapore and Malaysia worked well. I am not sure there is any other way to determine a stock price than let the populus to determine it.
Thursday, May 31, 2007
Tuesday, May 8, 2007
Buffett gives nod to index funds over ETFs
Its official, buffet gives a nod to index funds.
He does not have anything against ETFs either, he thinks that ETFs would impose greater temptation to trade, which is a very very valid concern.
Investing has been split into people supporting indexing (ETFs) and cherry-picking stocks (aka buffet style), now buffet seems to acknowledge the advantages of index funds. The 2% management fund in index funds is huge that you have to hold a lot longer to get the desired %, the low fee ETFs therefore offer a good alternative, one disadvantage is the temptation to sell, that depends on you. Another disadvantage is ETFs are not cherry picked, but thats the point, it is proved to be hard to beat the index by cherry picking in the long run.
So, if you can resist the temptation to get swayed based on recent past, you would do good with ETFs. If you are a person who gets into ST buying and selling, you are screwed anyway :)
He does not have anything against ETFs either, he thinks that ETFs would impose greater temptation to trade, which is a very very valid concern.
Investing has been split into people supporting indexing (ETFs) and cherry-picking stocks (aka buffet style), now buffet seems to acknowledge the advantages of index funds. The 2% management fund in index funds is huge that you have to hold a lot longer to get the desired %, the low fee ETFs therefore offer a good alternative, one disadvantage is the temptation to sell, that depends on you. Another disadvantage is ETFs are not cherry picked, but thats the point, it is proved to be hard to beat the index by cherry picking in the long run.
So, if you can resist the temptation to get swayed based on recent past, you would do good with ETFs. If you are a person who gets into ST buying and selling, you are screwed anyway :)
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