Just Because This Advice Gets Endlessly Repeated Doesnt Make it Right

Sure enough the two recommendations for investors are being proferred again despite the face that in up and down markets, volatile and less volatile these expensive strategies have a dismal record of outperforming indices.

Below are 2 "tips" that have a poor record of outperforming index instruments from a recent nyt article.

5 Tips to Weather a Turbulent Stock Market

Wealth Matters

.....Pick individual winners. With wild swings in the markets, active investment managers — those who buy and sell individual stocks instead of allocating money to an investment fund that tracks an index — say their skills are more in need now.

They argue that stocks are going to begin to show differences and that their skills at stock selection will keep investors’ portfolios from being dragged down with an entire index. In other words, in a market where everything isn’t going up, selecting the best individual companies makes more sense.

....Find alternative strategies. Alternative investments are the province of investors who are willing to sacrifice access to their money for higher returns. But when markets were posting double-digit gains, they became less attractive.

Hedge funds, in particular, earned a bad reputation for the high fees they charge to manage money on top of taking a share of any profits. Some sophisticated institutional managers, like the California Public Employees’ Retirement System, announced in 2014 that it was getting out of hedge funds because they were too expense and complex.

But financial advisers and money managers are arguing that in a volatile investing environment, investors should reconsider hedge funds and other alternative assets like private equity, private debt and real estate. Their returns, they say, are less correlated to the fluctuations of the stock and bond markets and thus provide a steadying force.