There Is No Single Best Way To Succeed

A couple of days ago I wrote a post debunking (or trying to anyway) some of the concepts put forth by Larry Swedroe in an interview with Seeking Alpha. I looked back at that interview yesterday to see what might be there in the way of comments. There were over 130 when I last looked. The comments were a mix of pro-passive and anti-passive along with several replies from Swedroe.

Scanning through the comments was a great reminder that there are many different ways to construct a portfolio and have success versus whatever the objective might be. I think the objective for most people is really about having enough money when they need it, but I realize not everyone can look at it that way.

The original Swedroe article seemed to imply there is only one way to get it done which intuitively cannot be. Indexing can work but there are plenty active managers with long track records of beating the market. People trade their way to success (where success is having enough when they need it) while others buy and hold their way to success. Within trading there are countless ways to succeed like selling on strength versus selling on weakness along with countless other choices.

This is not to say that any type of investor can't get better at what they do but it is encouraging for those willing/able to put the time in to figure out their best way and devote time to improving can have success even if they are not the next Peter Lynch. A proper savings rate doesn't hurt either. The key takeaway is putting in the time necessary to figure out what is best for you and how to improve as time goes in order to give yourself the best chance for success.

On a somewhat related note Felix Salmon had a post where he reviewed Market Riders which is a sight that helps people with rebalancing their portfolios. In the post was the following quote from Felix; "One of the reasons that individual investment returns nearly always lag the market as a whole is simple laziness."

This is a provocative comment. Obviously this is true to some degree, the question is to what degree? There is no limit to the types of behaviors that inhibit portfolio success and certainly laziness is one of them. The context of lazy in the article was just taking the time to rebalance but it can also apply to many other aspects of investing including saving money. In another aspect of my life I like to say that not going to the gym is the easiest thing in the world. Not saving money might be just as easy.

While doing the requisite work may not be easy it is relatively easy to recognize when we are being lazy and it is a behavior that is easier to fix than flaws with various parts of the analytical process.