How wonderful Aditya

It\’s a good piece, certainly. But our man, Mr. Chakrabortty, entirely manages to miss the implication of his finding.

If fund managers and front bench politicians are so hermetically sealed off from the real world, if they really don\’t know what\’s actually happening out there, then we should simply not be using fund managers and front bench politicians to run the real world, should we?

With fund managers of course the secret is already out: using a managed fund is really not a sensible thing for anyone. Low commission index funds and nothing else.

As for politicians, if they really don\’t know anything:

As for frontbench politicians, Davis describes their decision-making as almost entirely \”subcontracted\” – with the parameters set by colleagues or advisers or the latest fuss in the papers.

If they\’re really not up to the task then we shouldn\’t have them attempting the task, should we? Tell \’em to bugger off, we\’ll do it for ourselves thanks very much.

You know, the free, liberal, classically liberal, society. Government acts only where something must indeed be done and government is the only actor that can do that thing. Everything else belongs to us, the people, to get on with as we wish.

Strange that he doesn\’t make that point really, isn\’t it?

5 thoughts on “How wonderful Aditya”

  1. there’s a difference between putting your money in an index fund that is free riding off active investors who think about fundamentals, and the idea that somehow we’d all be better off investing in indexes, and that nobody should pay for active management.

  2. Is there any evidence that a world of just index funds would be better than one with some fund managers? I don’t doubt there are too many, but none?!

    It’s not good enough just to show returns on index funds post cost are better on average (or more accurately aren’t better before costs) we need to know what the return would be without index managers.

  3. LE/Matthew: Interesting though very abstract observations; but if you both had (say) £0.5m to invest, would you follow Tim’s advice or ignore it? And if you ignored it, what (roughly) would you invest in?

  4. paul

    right now what money I have is in index trackers, because we live in a world where there are active traders.

    I did come across some papers looking at the question of how stock markets behave as the proportion of trades accounted for by index trackers rises, but I can’t remember where. I suspect that if the market was 100% trackers then the market could be gamed.

  5. Paul – the only half a million investment I have is a huge leveraged bet on the property market (!)

    Luis – I think I saw something suggesting the number of fund managers needed is quite small, but I can’t remember where.

    Is the commodity market a good counter-example? In that index funds are a huge proportion of investable funds, and there is front-running etc.

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