Buying a Slice

Passive Investing involves fewer buying and selling decisions, and often results in an investor buying an index fund. The theory of passive investing suggests an efficient market. This means all available, relevant, information is included in the price. There is therefore no way to “beat” the index’s performance (other than by chance) because there is no mismatch between value and price (no bargains on offer). An index is a “basket of everything”. Except there is no market for “everything you can buy”, and there is no index tracking “a slice of everything”. You still need to actively choose an index, then take a view on that market’s efficiency. Fewer decisions lowers the costs. I agree. But my approach is more “Wu Wei”. Action through inaction. Make as few decisions as possible, but don’t buy something just because it is there. I believe in Fundamental Investing. Not buying something just because it is a bargain. Buying a slice of a real business because I understand what it does. I have a sense of its sustainability (because compounding matters). A sense of its resilience (because the world is unpredictable). Investment is about solving real problems in the real world. Consistently and creatively getting stuff done.