When I penned an article (here) criticizing the lionization of the Lazy Portfolio mantra as just historical cherry-picking and luck, the MarketWatch lemmings jumped all over me for doing the unthinkable – challenging such a seemingly successful strategy with great PR. What I said at the time was pretty much that these portfolios were no more likely to beat a simple S&P500 index or other major benchmark than a monkey throwing darts at a newspaper. Ironically, since my initial critique, the performance of ALL the Lazy Portfolios MarketWatch was plugging started to underperform and guess what? No articles since October 2010. Why the silence? Then this week, finally, they ran an article (here) touting how great they were again and how they beat benchmarks during the prior 3 and 5 year period. Well, we knew that – for the reasons I cited 2 years ago – they held either emerging markets or bonds, etc., which had outperformed historically. But the article kind of glossed over the sub-par performance during the past year. How could you write a “winning” article with such gusto when you’re really LOSING? In reading the article, it’s practically calling anyone NOT using a Lazy Portfolio an idiot.
Out of Date, Out of Touch
Perhaps they’ll get around to updating it, but there’s an out of date table with returns versus the S&P500 that shows 7 out of 8 of the Lazy Portfolios LOSING to the S&P500 during the prior year…and the 8th is a marginal win, so let’s call it even with the higher expense ratio and trading costs compared to just owning SPY.
The table is out of date because it shows the S&P500 as being up 13.10% when it is up less than that over the prior year period (off by a few points), but regardless, they are underperforming as of today I’m sure as well.
Finally, you’ll surely get a kick out of the pictures of Paul Farrell, the proponent of these mediocre gimmicks. The two picks are about 30 years apart. Why not just use the same headshot for all articles? Not really relevant to the investing thesis, but more of the same from Marketwatch – disjointed gimmickry.
Again, don’t get me wrong. Most investors would probably be better served in having a long-term strategy of diversified, low-cost ETFs instead of trading in and out of stocks. But let’s just call it like it is. These Lazy Portfolios aren’t the holy grail they are purported to be. Overconfidence is one of the most dangerous attributes in investing. Look what happened to real estate investors since 2007, the investment banks during the financial crash and now, the gold/silver permabulls. Overconfidence is way more dangerous than being a skeptic.
Are You Enamored by Lazy Portfolios?
Or Do You Have Your Own Strategy?
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