A Different Take On Passive Vs. Active

My investment strategy is simple, I buy few index ETFs and hold them forever. Happy with market returns, I forgo any attempts at outperformance. I've written a fair amount about my liking for a low-effort, low-fee, passive strategy. Despite this, I am not at all against active investing.

You can be very successful picking the right investments. I know those who've made a lot doing so. I also know those who've lost a lot. These groups are not mutually exclusive.

Active investing is hard, and it very well should be. If everyone could do it, all profits would vanish. Only a few outliners will ever do well. This applies across all fields. Only a few players will make it to the NBA, even fewer will win a ring. Only a few authors will get a publishing deal, even fewer will make the best-sellers list. It takes a lot of effort (plus some luck) to become elite. If you're able to rise above, tremendous fortunes await.

With great rewards come great risk. The risk of wasted effort, forgoing opportunities, and losing it all.

Risk is why I invest like I do. I have a long enough time horizon and a modest enough lifestyle to achieve my goals without being an amazing investor. I can afford NOT to take these risks, so why do it? I can focus my efforts and take risks in other areas.

So unlike die-hard passive investors, I think it is indeed very possible to beat the market. It's just comes with risks, fortunately risks that I don't need to take.

Comments

Today's Special: Humble Pie

You champion a project, fight for an idea, and then...reality sets in. That churning in your stomach isn't butterflies, it's the realization you've missed the mark. Pride will puff up your chest, and kick in the "defend at all costs" instinct. But arguing with the umpire never changed a call. Admitting you're wrong isn't a sign of weakness. It can strengthen your professional standing. In a world obsessed with the illusion of infallibility, the courage to adjust course is a breath of fresh air. It shows you're confident enough to be wrong, and adaptable enough to learn from it. Do your research, think critically, and stand behind your decisions. But when the data whispers (or screams) otherwise, don't be afraid to swallow that slice of humble pie. Be the first to acknowledge. Don't wait for someone to point out your mistake. Be open, take responsibility, and most importantly, focus on what you're going to do to address it. Don't dwell ...

Starting Really Really Small

On your desk is one of the most intimidating sights known to man. A blank page. The prospect of filling it up with anything resembling decent seems insurmountable. Staring at the long road ahead fills you with anxiety and dread. The first step is the most difficult. So we procrastinate. We " research ", we " prep ", we " plan ". We do everything except tackling the problem. We avoid the pain for as long as we can. To make a blank page less intimidating. Tear it in half. There, half as scary, twice as easy. Still too much? Do it again. And again. Keep doing it until the task is so small that it's too easy not to do. Getting starting is the hardest part. So make the hardest part as easy as possible. This doesn't guarantee amazing results, but it gets you in the game. You can't win if you don't play.

Why We Shouldn't Be Afraid of Ambiguity

Ambiguity. That fuzzy monster that chases us down darkened hallways, whispering doubts about our roadmap and feature sets. You know the feeling. You constantly wrestle with unknowns: Will users like this? Is this the right direction? Frankly, if you had a nickel for every time the answer wasn't crystal clear, well, you might actually want to chase that ambiguity down the hall. But here's the thing: ambiguity isn't your enemy. It's your dance partner. Innovation rarely happens in a land of perfect clarity. Sure, there's a time for well-defined processes. But when you're creating something new, there are bound to be more questions than answers. The key is to learn to waltz with the unknown . Embrace the experiment. Don't be afraid to throw some spaghetti at the wall and see what sticks. Focus on outcomes, not outputs. Don't get hung up on features. What problem are you trying to solve? How will you measure success? Get comfortable with "go...

Herman Ye

Search