Monday, December 03, 2012

Intelligent Investing

As we begin Week Two of TAG 401(k) enrollment meetings, more investing advice:

... Any fair study of mutual fund performance soon uncovers that low-cost index funds achieve better performance than a large majority of actively-managed mutual funds without adding risk. This statement is true for index funds covering every asset class, investment style and fund category. Index fund investors use this knowledge to effectively increase their portfolio performance. This decision embodies the very definition of investment skill.

What all persistence studies show is that active manager performance is mainly due to luck, not investment skill. Picking winning stocks or bonds isn’t like playing chess, where skill is the sole driver of performance, according to Michael Mauboussin, investment strategist and author of The Success Equation, Untangling Luck and Skill in Business, Sports and Investing. A champion chess player almost always beats lesser players because it’s a game of skill. With investing, this year’s winning manager often becomes next year’s losing manager. Mauboussin contends a pattern of inconsistency in an activity points to outcomes that are largely a result of luck, not skill. ...

In recent 401(k) enrollment meetings, I have emphasized that the parts of investing that individuals can control are 1) costs, and 2) asset allocation (your stock-and-bond mix; your stock-and-bond diversification.) Mr. Market controls everything else.

The small, quiet secret about smart investing is that, when you scrape away the b.s. of the financial media, a winning investment strategy is really quite simple. The thing that makes it hard is ... human emotion. When markets are dropping like anvils out of sixty-story windows, it's incredibly difficult for mortals to resist the fear impulse and not sell everything. Sadly, many people under-estimate their ability to withstand bone-deep financial pain, and sell at the wrong time.

Happily, the TAG 401(k) Plan offers different index funds with broad diversification and low costs, making it relatively easy to be a smart investor. (It also offers more expensive active funds if that happens to be your desire. We try to please everybody.)

All you have to do to get started is come to one of the meetings listed below.

TAG 401(k) Enrollment Meetings

Bento Box
Wednesday, December 10, 10 am
Main Break Room

Disney TV Animation
Tuesday, December 11, 10 am
Sonora Building, Room 1172

Disney TV Animation
Tuesday, December 11, 2 pm
Empire Center, Room 5223

DreamWorks Animation Television
Thursday, December 13, 2 pm
Main Conference Room

Film Roman
Wednesday, December 4, 2 pm
"Glass" Conference Room

Fox TV Animation
Thursday, December 6, 2 pm
Main Conference Room

Wednesday, December 12, 2 pm
Main Conference Room

Warner Bros. Animation
Wednesday, December 5, 2 pm
Building 34R - Main Conference Room


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