In a piece published on CNBC’s website, Timothy Armour took Warren Buffet to task for wagering a million dollars that he could outperform a crew of hedge fund managers by simply putting his money in the S&P 500. Tim Armour agrees with the general idea that Buffet was trying to express. There are indeed, in Armour’s view, too many low-quality funds that simply to do not make a good investment.
On one hand, Armour praises Buffet for his love of the fundamentals and his bottom-up approach to investing. On the other hand, he argues that the distaste expressed by Buffet and others for active investing and support for passive investing is not constructive or helpful for less-experienced investors. Armour points out that while indexes are an important part of a balanced portfolio, they are no protection against economic downturns.
According to Tim Armour, one of the best things that investors can do to maximize their returns is to outperform the crowd when the markets are down. The problem is that index investors are too exposed to these successive waves of bull and bear markets. He believes the solution is for investors to choose better funds instead of limiting themselves to index investing out of a false sense of security.
Tim Armour has been Chairman of the Capital Group Management Committee since 2015. Prior to being elected chairman by the committee, he was a portfolio analyst and equity investment analyst for the group. He joined the group after graduating from Middlebury College with an undergraduate degree in Economics.
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