Warren Buffett is one of the most well respected and successful investors in the world and the second richest man in the whole of America (as of March, 2017). As such his opinions and business practices are widely followed and often imitated.
Recently, he decided to lay out a 1 million dollar investment for charity via a S & P 500 passive index fund. Mr. Buffett believes that he can get better investment returns through the aforementioned vehicle than through a whole group of hedge fund managers.
However, one man, Timothy Armour, vehemently disagrees. Timothy Armour (known to his friends simply as Tim), for those who might not be familiar with him, is, like Buffett, a highly decorated businessman and investor who is best known within the business world as the chairman and chief executive of Capital Group’s Capital Research and Management sector.
The principal point of disagreement Mr. Armour finds with Mr. Buffett lies with the investing moguls methodology. Mr. Armour explains, in a recent piece he has released, that though passive index funds can be useful and certainly can have their place in any seasoned investors portfolio, they are far from the best and most versatile option for the long haul. The reason? Passive index funds offer absolutely no protection against markets which have fallen into a downward spiral. One thing any investor who has been in the game for any length of time should always know is that bull markets ALWAYS turn and that is a huge problem for anyone who is putting most, or all, of their eggs in one passive index fund basket.