As reported in a 1988 New York Times exposé, in the 1950s, “independent researchers began publishing major studies on the health hazards of smoking.” How did the cigarette companies, respond? To their credit, they substantiated the same findings, and tried to create safer smokes. Unfortunately, as The New York Times revealed, they did this work in secrecy, while “publicly denying that any hazards had been established.” So much for offering them a Good Citizen Award for their efforts.
What does this have to do with today’s Common Sense Investing video, “Why Your Financial Advisor Doesn’t Like Index Funds”? It’s an out-of-sample example of how we humans (including financial advisors) are often unable to make changes for the better. Even when the evidence tells us it’s high time. Even if – in fact especially if – our livelihoods depend on it.
The challenges of facing up to common-sense reality are as real for today’s advisors who refuse to switch to index funds as it is for cigarette manufacturers who still haven’t given up the ghost. Today’s video offers four compelling reasons why this is so. While these reasons may not be enough to change your advisor’s mind, I hope it will convince you that active investing is hazardous to your wealth. Stop doing it today.
Instead, keep watching my Common Sense Investing videos by subscribing here. I expect you’ll find them good-habit-forming.
Original post at pwlcapital.com.