If someone so smart he could go head-to-head with all comers on a game show likes exchange traded funds (ETFs), shouldn’t we all get on board?
Ben Stein – yes, that Ben Stein – in an interview with Olivier Ludwig for Index Universe, said that he loves ETFs, and investors would generally do better with an index in the long run, stating that John Bogle’s ideas on index investing motivated him to use the investment tool.
Additionally, Stein is a big believer in passive investing emphasizes that the single biggest mistake investors make is believing they can outperform the indexes. [In An Opaque Investment World, ETFs Are a Ray of Light.]
ETF’s low prices, exposure to foreign markets and their sub-subsectors and broad-based indexing are the main reasons why Stein likes ETFs.
Stein has gained exposure to foreign markets by trading in countries like Canada, Australia, China and Russia. He’s also dabbled in energy and natural resource funds. He currently has the bulk of his savings in diversified indexes and considers 15% to 20% the right amount to be allocated in the emerging markets. [Report: Most Investors Don’t Know ETFs.]
Ben’s got the right idea here:
- He recognizes that beating the market on a consistent basis is so difficult to do that most investors are better off just buying the market instead.
- He also sees the value in diversification – he’s got exposure to both developed and emerging markets, as well as in various sectors. He’s got his eggs in several baskets, not just one.
We like that kind of realistic approach to investing and the markets. To learn more about using ETFs for yourself, visit Education Central.
For more information on exchange traded funds, visit our ETF 101 category.
Max Chen contributed to this article.