Don't Just Sit There, Do Something!

The average person on the street believes:

• you reap what you sow

• your return is commensurate to the effort you put in; and

• there is no free lunch.

The belief may be - you have got to put in a high amount of effort before you see any returns. Indeed, action junkies demand constant turnover of reports, writings, calculations and graphs, before making any decision.

That belief from daily life, in turn, translates to a belief that active investing is the way to produce high returns. In mathematical terms, an alpha of returns is demanded. This makes the trouble of investing worthwhile.

The truth may in fact be counterintuitive, and some authors and investors believe that, if you do not have a particular edge in investing at all, you are better off seeking a beta of returns. In other words, the average market returns from passive investing would suffice for you.

Correspondingly, seeking market returns means that minimal or significantly lessor efforts needs to be taken to obtain a only slightly lesser amount of returns. Accordingly, lessor effort and only slightly lessor returns ensures that you get a satisfactory return.

This seems counterintuitive, based on the truisms mentioned in the beginning of this article. A certain author may do a better job in explaining this than I.

For stories, analogies and metaphors explaining why investing for market returns may suffice, read Enrich Your Future, by Larry E Swedroe. It is available both from Amazon Kindle books and locally from Kinokuniya.

Larry shows to the reader, that however counterintuitive investing for market returns may be, it may be the way to go for the average reader.

If you have already read the book, or have some views, counter or otherwise, regarding the suggestion to invest for market returns only, leave a comment, question or like below.

Do you agree that the amount of work for market returns is significantly less? Will you be satisfied with non-outperformance? Do you have questions about how it works?

Comment, question or leave a like below.