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Yahoo
an hour ago
- Business
- Yahoo
An investing guru explains why you shouldn't cash out if you think a crash is coming
Burt Malkiel warns investors against trying to time the market in a new letter. The author and economist advocated for long-term, passive investing in broad-based index funds. He told BI it's "invariably the wrong decision" to cash out when stocks are tumbling. As tech stocks propel the market to record highs, Wall Street legend Burt Malkiel is glad he invested in Nvidia — but only through index funds. The chipmaker's share price has surged 12-fold since the start of 2023, supercharging its valuation to an unmatched $4.4 trillion. Malkiel told Business Insider that he's happy to have owned the stock as part of the S&P 500, as the idea of investing directly in Nvidia a couple of years ago — when it was trading at more than 100 times forward earnings — "would have scared the hell out of me." Malkiel, 92, the chief investor of Wealthfront, a robo-advisor with over $80 billion of client assets, warned against selling stocks with a plan to reinvest once prices retreat from all-time highs. The retired Princeton economics professor — a renowned advocate of passive investing — told BI the "biggest unforced error" that investors make is trying to time when to sell and when to get back in, adding it is "virtually impossible" to get both right. Malkiel said he understands people feel pressure to sell when stocks are dropping and they're watching their life savings shrink. "Boy, I know the emotions, I know how hard it is," he said. But cashing out is "invariably the wrong decision," he added. Malkiel argued this in a Thursday letter titled "Don't Miss the Market Rebound," cowritten with Wealthfront's investment-research boss, Alex Michalka. In the letter, Malkiel said that the 10 best days for US stocks in the last 50 years closely followed significant market declines. Five were during the global financial crisis, three were at the height of the COVID-19 pandemic, and one was after Black Monday. The final and third-best day on the list was April 9 this year, when the S&P rebounded 10% to register its largest one-day gain in 17 years. The index had fallen 12% between April 2 and April 8 in reaction to Donald Trump unveiling his tariff plans. Emotions, concentration, and memes Malkiel recommended that people invest part of every paycheck into a diversified index fund, a strategy called "dollar-cost averaging." This "set it and forget it" approach minimizes advisory and transaction fees, and helps investors avoid making hasty decisions and missing out on returns, he said. He criticized leveraged ETFs that promise a multiplied return on a stock or index. "These are just sort of pure speculative pieces of paper, and that bothers me," he said. Meme stocks, which are having a renaissance, "invariably lead you astray," Malkiel said. "Like any gambler, you can have some hits and make some money, but over the long run, you're going to lose money." The market's long-term performance remains "damn hard to beat," he said, adding that believing you know better is "likely to be a recipe for disaster." Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Australian
a day ago
- Business
- The Australian
Investing in EFTs: A guide for beginners
The Australian Business Network They have only been around in Australia for 24 years, but exchange-traded funds have become a popular way to build wealth among investors of all ages. ETFs, as they're usually called, are similar to shares, but instead of buying one share to hold a stake in a single company, each ETF unit can give you a slice of hundreds of different companies. This reduces the risk of holding shares in a single company that can potentially go bust, and it smooths out your ride by holding smaller stakes in many companies. Types of EFTs The most widely held ETFs are known as index funds, because they track an index such as the ASX 200 or the S&P 500 in the US. They are designed to deliver the same return as the index they follow, minus fees averaging about 0.5 per cent annually. You are essentially owning a basket of listed companies. More recently, specialised ETFs have surged in popularity because they focus on sectors, countries or themes. A good example of an index fund is Vanguard's VGS ETF, which tracks an international share index and holds about 5 per cent in Apple, 4 per cent Microsoft and Nvidia, as well as 2.5 per cent of Amazon and many other well-known global companies. The proportions of its shareholdings will change in line with each company's movement in market value. Specialised ETFs offered in Australia include funds focusing on robotics, cybersecurity, defence infrastructure, gold, bonds, currencies and ethical investing. If you want to look at more obscure or emerging investments, you can buy ETFs covering cryptocurrency innovators, digital health and telemedicine, video games and E-sports, US Treasury bonds and individual countries including India, Japan, China or South Korea. Many of these specialised ETF are actively managed, rather than the passive management of index funds, so their annual management fees can be higher, sometimes above 1.5 per cent. History The world's first ETF was launched in Canada in 1990 and the first in Australia was in 2001, a State Street Global Advisors product that tracks the movements of the S&P/ASX 200 index. It's still going today, with the ASX code STW, and has about $6bn of investors' funds sitting in it. If you put $1000 into STW in 2001, today it would be worth more than $2300 (not including distributions), broadly following the ASX 200 index over the past 24 years. There are now more than 360 ETF products available in Australia, and it's estimated that in mid-2025 a quarter of a trillion dollars of Australians' wealth was sitting in ASX-listed ETFs. They have been particularly popular with younger generations, with social media influencers hailing them for their low management costs and ability to diversify people's investment dollars with a relatively small outlay. Warren Buffett loves them, too ETFs have also been popular with the man widely seen as the world's most successful investor, Warren Buffett. One of the richest people in the world, for many years Buffett has advocated for ETFs and has recommended that 'a low-cost index fund is the most sensible equity investment for the great majority of investors'. Index v active If you're tracking an entire stockmarket index, you are not placing individual bets on stocks or sectors that may implode at some point. This strategy means you won't beat the index in the long run, but experts say active investment managers often fail to beat indices even though they're professional stock pickers. says the majority of ETFs in Australia are passive index-based investments that do not try to outperform the market, and warns that the handful of active ETFs may use higher-risk trading strategies. How to buy an ETF Buying into an ETF is like buying a share. You can go through an online stockbroker, full-service stockbroker, investment platform or financial adviser. Just like shares, the settlement of the trade will occur two business days later, and you will probably pay brokerage fees. If you want to skip the middleman, a small number of ETF providers – including Betashares and Vanguard – allow you to set up accounts with them and buy and sell ETFs directly without brokerage fees. EFT risks Diversification is a great positive of holding ETFs, as for a single $500 or $1000 investment you can be exposed to many of the world's most successful companies. Low cost is the other big benefit, compared with traditional managed funds that historically charge higher fees. ETFs also offer transparency as it's easy to discover which shares your ETF holds. However, as with all shares, there are always risks to investors. There is the ever present threat of a stockmarket crash, and currency moves that can affect the prices of ETFs holding overseas shares. Tax implications of EFT investing If you like getting your tax refunds quickly each year, ETFs can make this tricky because you need to wait for your ETF provider to send you their annual tax statement. This sometimes does not arrive until August. It will include information about capital gains, dividends, franking and other tax details, so you don't have as much control as you do owning shares directly. Want to learn more about ETFs? The Australian Securities Exchange offers a free ETFs course at Are ETFs behind Commonwealth Bank's record run? Read related topics: FundsWealth Anthony Keane Personal finance writer Anthony Keane writes about personal finance for News Corp Australia mastheads, focusing on investment, superannuation, retirement, debt, saving and consumer advice. He has been a personal finance and business writer or editor for more than 20 years, and also received a Graduate Diploma in Financial Planning.
Forbes
21-07-2025
- Business
- Forbes
The Quiet Comeback Of Structural Alpha In A Crowded Market
A tiny delicate shoot of a plant grows out from an inhospitable crack on a concrete path, struggling ... More to survive and grow in the harsh conditions that it has taken root. Great survival, hope and and adversity concept. Good useable copy space also with shallow focus on the seedling. For the last decade, we've heard the same line: alpha is dead. Passive flows took over. Factor models dominated. Screens flattened the edge into noise. With benchmarks outperforming the funds meant to beat them, many assumed skills had nowhere left to hide. But that conclusion was too easy. Structural alpha is alive and kicking. Alpha didn't disappear. It stopped showing up in the obvious places. As the crowd chased macro calls and beta-led trends, real opportunity quietly moved to the edges of the market, where structure, pressure, and complexity still drive mispricing. These aren't trades you screen for. They're setups you uncover. Real returns didn't die; they just went quiet. And now, with capital behaving irrationally again, it's starting to reemerge. went quiet. And now, with capital behaving irrationally again, it's starting to reemerge. What Killed The Alpha Conversation The idea that alpha no longer exists didn't come out of nowhere. It came from a market shaped by passivity and scale. As trillions poured into ETFs and index funds, price discovery weakened. Buying became mechanical. Fundamentals faded. Meanwhile, hedge funds, the vehicles built to find alpha, underperformed. Many lagged their benchmarks, and capital shifted toward low-cost beta. Factor investing took over. Value, momentum, and quality were sliced into screens and sold as efficient. For a while, it worked. But it worked too well. Everyone chased the same patterns using the same tools. Edge got crowded. Outcomes flattened. Differentiation vanished. So, the industry declared alpha obsolete. What really happened wasn't its death. It was the disappearance of trades that looked like alpha but were just easy wins. The real edge didn't vanish. It moved out of reach. Where Alpha Hid Markets recently have just gone one way. Up. As assets ballooned, managers gravitated toward size and liquidity. Big names. Index-adjacent holdings. Anything that could take size without moving. What got left behind were the setups that couldn't be boxed or scaled. Spinoffs, breakups, restructurings. These weren't broken opportunities. They just require time, focus, and conviction. three things the modern market doesn't reward. Earlier this year, we followed a separation with all the signs: tight float, neglected parent, and forced selling. The setup was messy. But the structure was clean. Within weeks, coverage picked up and the multiple rerated. Not because momentum kicked in, but because recognition did. When most turned to screens, the edge went back to doing the work. Structural alpha didn't vanish. It moved where almost no one bothered to look. What Structural Alpha Really Is Structural alpha isn't a style. It's not about timing. It's inefficiency, specifically, inefficiency caused by how capital behaves, not what it believes. When funds are forced to sell because of index rules…When spins carve out unloved segments… When rights offerings get ignored… When incentives quietly shift inside a company… That's when price disconnects from value. Not because the fundamentals changed, but because the ownership did. These aren't trades based on some clever modeling; they're driven by process and structure. You're not chasing growth; you're positioning in front of mechanical pressure the market hasn't priced. Most won't bother. It's not clean. It's not scalable. It's rarely comfortable. But that's exactly where edge still lives, in the footnotes, in the filings, in the places where capital moves out of obligation, not conviction. The Edge Of Thinking Differently Edge today isn't about speed or access. It's about seeing what others avoid. Being early. Sitting with something that doesn't make sense yet. Structural trades don't come prepackaged. The story is unclear. The chart looks broken. Liquidity is thin. But that discomfort is part of the signal. If it felt easy to own, it would already be priced in. Most investors want clarity. They want confirmation. Structural alpha offers neither, until it does. This isn't about brilliance. It's about doing work that's out of fashion. It's about staying still when others chase. The ones who get paid aren't the fastest. They're the ones who understand before the market does and have the patience to wait until the structure catches up. What To Watch Now Structural alpha is reappearing, not in momentum, not in macros, but in overlooked setups forming quietly. We're watching spinoffs where capital-starved parents are shedding dead weight. Divestitures are driven by necessity, not strategy. Balance sheets are quietly restructuring under pressure the market hasn't priced yet. Margins are shrinking. Boards are getting squeezed. Conglomerates built in easy-money cycles are cracking. That's creating overlooked assets, forced reallocation, and new standalone businesses that the market still hasn't recognized. In many cases, the value is already there. But the float is small. The story's fuzzy. Sentiment ranges from indifferent to skeptical. That's the opportunity. Not when it's clean, but when it's misunderstood. If you want a signal in a noisy market, stop looking for comfort. Look for pressure. Look where businesses are being reshaped by need, not choice. That's where value hides before it's understood. Alpha didn't disappear. It just stopped making noise. It's coming back, but not where most are looking. It's showing up in the quiet corners of the market, where the structure breaks and capital moves blindly. The next cycle of returns won't reward scale or speed. It'll reward patience, discipline, and the willingness to make change before it's obvious. Structural alpha is back. Quietly. Steadily. Waiting to be seen. Edge never disappeared. It just went underground, waiting for someone willing to dig.
Yahoo
21-07-2025
- Business
- Yahoo
Warren Buffett: Here's What You'd Make If You Invested $100 a Week in These Index Funds
When you get some investment advice from Warren Buffett, you may want to heed it. The billionaire CEO of Berkshire Hathaway, one of the richest people in the world, has garnered the nickname 'The Oracle of Omaha' due to his legendary investment decisions and prowess in the stock market and beyond. That's Interesting: For You: Berkshire Hathaway, which is essentially a holding company for his investments, has a competitive advantage with him at the helm as it more than doubled the return of the S&P 500 over an incredible 60-year period, an enviable record that has brought him much acclaim. Yet, for most investors, Buffett is a huge proponent of low-cost index funds. Why has Buffett repeatedly said this, and how well has the S&P 500 done? Here are some investment tips from the man himself, to hopefully help you grow your net worth. What Has Buffett Said About Low-Cost S&P 500 Index Funds? In his long and storied career, Buffett has endorsed low-cost mutual funds numerous times. Here are just a few key principles from his quotes on the matter: In 1993, Buffett told his shareholders: 'By periodically investing in an index fund, for example, the know-nothing investor can actually outperform most investment professionals. Paradoxically, when 'dumb' money acknowledges its limitations, it ceases to be dumb.' In 2020, he continued to endorse the S&P 500 at the Berkshire Hathaway annual meeting, telling shareholders, 'In my view, for most people, the best thing to do is to own the S&P 500 index fund. People will try and sell you other things because there's more money in it if they do.' In 'The Little Book of Common Sense Investing,' by Vanguard founder and former CEO John Bogle, Buffett said, 'A low-cost index fund is the most sensible equity investment for the great majority of investors.' In one of his most direct messages, Buffett outlined his philosophy to Becky Quick on CNBC's On the Money: 'Consistently buy an S&P 500 low-cost index fund. I think it makes the most sense practically all of the time… Keep buying it through thick and thin, and especially through thin.' Find Out: Buffett's Famous S&P 500 Wager As befitting such a legendary investor, Buffett put his money where his mouth was in 2007, betting $1 million that the S&P 500 would outperform hedge funds over the following 10 years. Ted Seides, a hedge fund manager at Protégé Partners, accepted the wager and picked five hedge funds he said would outperform the S&P 500 over the next decade. Unfortunately for Seides, the bet was so lopsided in the favor of Buffett and the S&P 500 that he acknowledged he had lost before the 10 years even elapsed. When all was said and done, the S&P 500 had trounced Seides' hedge fund selections, with an average annual return of 7.1% vs. 2.1%. Except for 2008, when the S&P 500 lost nearly 39% of its value, the index outperformed the group of hedge funds in every single year of that decade. How Much Would You Have If You Invested in the S&P 500? Over the last 20 years, the S&P 500 has posted an average annual return of 9.75%, right about in line with its long-term average. Here's how much you would have now if you invested in the S&P 500 20 years ago, based on varying starting amounts: $1,000 would grow to $2,533 $5,000 would grow to $12,665 $10,000 would grow to $25,331 $20,000 would grow to $50,662 $50,000 would grow to $126,654 $100,000 would grow to $253,308 Over the past decade, you would have done even better, as the S&P 500 posted an average annual return of a whopping 12.68%. Here's how much your account balance would be now if you were invested over the past 10 years: $1,000 would grow to $3,300 $5,000 would grow to $16,498 $10,000 would grow to $32,997 $20,000 would grow to $65,993 $50,000 would grow to $164,983 $100,000 would grow to $329,965 Final Take To GO: One Final Endorsement While Buffett is a professional investor, his wife is not. For this reason, as he wrote in Berkshire Hathaway's 2013 annual letter to shareholders, he has specific advice for the trustee of his estate after he dies. As Buffett wrote, 'My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.' Buffett obviously wouldn't want to squander away the money he leaves to his wife, and that might be his strongest endorsement of the S&P 500 index. Caitlyn Moorhead contributed to the reporting for this article. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard 3 Reasons Retired Boomers Shouldn't Give Their Kids a Living Inheritance (And 2 Reasons They Should) 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth This article originally appeared on Warren Buffett: Here's What You'd Make If You Invested $100 a Week in These Index Funds
Entrepreneur
17-07-2025
- Business
- Entrepreneur
JioBlackRock Gets Sebi Nod for Four Mutual Fund Schemes
The approved offerings include the JioBlackRock Nifty 8–13 Yr G-Sec Index Fund, Nifty Smallcap 250 Index Fund, Nifty Next 50 Index Fund, and Nifty Midcap 150 Index Fund. Among these, three are equity-based index funds, while one is focused on government debt securities. You're reading Entrepreneur India, an international franchise of Entrepreneur Media. JioBlackRock Asset Management, the joint venture between Jio Financial Services and global investment firm BlackRock, has received regulatory approval from the Securities and Exchange Board of India to launch four mutual fund schemes. The approved offerings include the JioBlackRock Nifty 8–13 Yr G-Sec Index Fund, Nifty Smallcap 250 Index Fund, Nifty Next 50 Index Fund, and Nifty Midcap 150 Index Fund. Among these, three are equity-based index funds, while one is focused on government debt securities. The company aims to tap into India's growing investor base with a digital-first approach that emphasises simplicity in fund offerings. This strategy aligns with models used by fintech firms like Zerodha, Groww, and Navi. With strong financial backing and access to a large user base, JioBlackRock is expected to bring increased competition to the market. Nithin Kamath, founder of Zerodha, responded positively to the entry of JioBlackRock, suggesting it could help broaden India's investor base. He also reiterated Zerodha's commitment to long-term profitability and customer-focused services, noting that financial strength alone does not create enduring advantages in stockbroking. Earlier this month, JioBlackRock completed its first new fund offer, raising INR 17,800 crore across three schemes. The offer attracted over 90 institutional investors and more than 67,000 retail investors in just three days. In addition to mutual funds, Jio Financial is expanding into wealth management and stockbroking. It recently established Jio BlackRock Broking Pvt Ltd, which is awaiting regulatory clearance to begin operations.
