Market-tracking index funds are decidedly non-random. Lumifer’s point is that you’re confusing the professional money-manager’s ability to make money off people who don’t want to manage their own money (i.e. marketing) with the professional money-manager’s ability to make money off picking individual stocks (i.e. finance), which on average does not exist. The money-management field does not represent ‘free money’ in that you need to actively market for clients, and there is not free money to be had in doing mediocre money management with your own money.
The point that you were trying to make, that there’s money to made simply by having capital and investing it in the entire economy as a whole, doesn’t seem like a knock-down objection to Lumifer’s point; by watching how my index fund holdings are doing, I am getting rapid and unambiguous feedback about how the overall economy is doing relative to various segments or other holdings.
Let me also point out three different things and note that they are different.
Thing one is financial services. They are services—they provide you with something in exchange for some sort of a fee. For example, providing an index-tracking mutual fund is a service. If you want to use this service, you pay for it and if the service is sufficiently popular, the provider makes a profit. This is not different in principle from buying the services of, say, a gardener or a car mechanic. Of course, some providers make inflated claims about their services, but that’s hardly limited to finance.
Thing two is investment/trading where you are trying to, basically, extract (more) money out of a market.
Thing three is putting capital to work which, strictly speaking, doesn’t even require markets. If you have some value and you put that value to productive use, you can expect (subject to a large number of caveats) to get some profit. This is not even finance, but basic economics.
Note that in none of these cases anyone is “taking completely randomized actions” or is guaranteed a profit.
Heh. Why don’t you go try it? Sounds like free money X-/
Besides, aren’t you confusing finance and marketing?
Do you not have savings at all, or did you actually just say you’ve put no portion of your savings in market-tracking index funds?
Market-tracking index funds are decidedly non-random. Lumifer’s point is that you’re confusing the professional money-manager’s ability to make money off people who don’t want to manage their own money (i.e. marketing) with the professional money-manager’s ability to make money off picking individual stocks (i.e. finance), which on average does not exist. The money-management field does not represent ‘free money’ in that you need to actively market for clients, and there is not free money to be had in doing mediocre money management with your own money.
The point that you were trying to make, that there’s money to made simply by having capital and investing it in the entire economy as a whole, doesn’t seem like a knock-down objection to Lumifer’s point; by watching how my index fund holdings are doing, I am getting rapid and unambiguous feedback about how the overall economy is doing relative to various segments or other holdings.
Did I actually say? Quote me.
Let me also point out three different things and note that they are different.
Thing one is financial services. They are services—they provide you with something in exchange for some sort of a fee. For example, providing an index-tracking mutual fund is a service. If you want to use this service, you pay for it and if the service is sufficiently popular, the provider makes a profit. This is not different in principle from buying the services of, say, a gardener or a car mechanic. Of course, some providers make inflated claims about their services, but that’s hardly limited to finance.
Thing two is investment/trading where you are trying to, basically, extract (more) money out of a market.
Thing three is putting capital to work which, strictly speaking, doesn’t even require markets. If you have some value and you put that value to productive use, you can expect (subject to a large number of caveats) to get some profit. This is not even finance, but basic economics.
Note that in none of these cases anyone is “taking completely randomized actions” or is guaranteed a profit.