A Review of Warren Buffett’s Investment Strategy

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Posted by omeditors | Posted in Business, CEO | Posted on 16-05-2017

Warren Buffett has invested $1 million in an S&P 500 passive index fund, which he believes will have higher profits than investing in hedge funds. Tim Armour believes that Mr. Buffett is right: many expensive funds are not profitable. Armour supports Mr. Buffett’s decision to invest in low cost and simple ventures that pay for a long time. This type of investment has worked for a long time.

Mr. Buffett offers some advice about investment. Consumers should be concerned about the product label. Investors should not be concerned about a company being active or passive. Investors should be concerned about the performance of a company in the long term. He blames poor long-run returns on high management cost and excessive trading. It is important for investors to know that passive index funds are exposed to down markets. Most investors do not know this mainly because of the existence of a bullish market for a long time. Click here to know more.

Lastly, Mr. Buffett observes that a significant number of actively managed funds have not outperformed the market although there are exceptions. He says a $10,000 investment in the top S&P 500 index fund in the past 40 years is now worth over half a million today. However, a similar investment in the best five active funds has earned more. However, Armour believes that there are two factors that can help investors know good fund managers; low expenses and an above average manager. Better performance than the market average is not random.

Timothy Armour’s Education and Work Background

Tim Armour graduated from Middlebury College with a BA in Economics. In 1983, Armour started working for The Capital Group Companies, Inc. as a member in The Associates Program. He has also worked as an Equity Investment Analyst at the company. Currently, he is the Chairman and Equity Portfolio Manager.

Linkedin: Linkedin.com/pub/dir/Tim/Armour

Comments (1)

It is important to know how to invest wisely given that most Americans have to plan for their retirement now. He was named as the chairperson of Capital Group on July 28, 2015. It quite alright that they understand too and you can click here to get everything that they want which may not be that easy too.

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