Minutes
Monthly Meeting,
800 Marguerite
Reported by: Reported by: Ed Casselman
and Bob Welge
Title: Smart Money: Why the Worlds Most Sophisticated Investors Index Their
Investment Portfolios and Why You Should Too
Speaker: Timothy Bock Founder, President,
The presentation began with a
review of active vs. passive investing and the efficient market
hypothesis. Tim followed with why you
should index: capital markets are efficient; concentrated portfolios have higher
risks and cost; superior returns are attributable to asset structure and
picking a manager or funds based on track record doesn’t help. He showed data that supported the point that
less than 10% of the managers of funds really add value.
Tim followed with a discussion of
where do the returns come from with illustrations from
historical performance of equity, value and small cap. He pointed out that the average investor is
decimated by poor timing referencing a 2005 Dalbar
Study showing the average investor made 3.7%/yr while the S&P averaged
13.25/yr. To improve performance he
recommends a disciplined strategy of portfolio rebalancing and tax minimization
using portfolio engineering based on scientific studies of capital markets for
buying and selling without forecasting.
He reviewed the Dimensional Fund Advisors, passively managed mutual
funds designed to capture the added returns from small and value companies available
to advisors only. He reviewed Summit
Portfolio performance over the past 15 years.
Tim closed with a summary of the
superior performance of small value funds since 1996 and recommendations for
several books to read. www.summitportfolio.com
Following
the conclusion of Jonathan’s presentation, Bob adjourned the meeting at