VTI Check

Virginia Beach, VA

Approximately every 35 days I check to see where the current value of the VTI ETF is positioned with respect to the 190-Day Exponential Moving Average.  The reason for using the 190-Day EMA is tied to faster movement as compared to the 200-Day Simple Moving Average which most investors follow.  I want to be slightly ahead of the trend.  As Platinum members can see, the current price is above all three EMAs used in this graph.  Note how far the VTI is positioned above the 190-Day EMA.  The same is true for the VTSMX index fund.

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Why Doesn’t Everyone Use Passive Investing?

If passive investing is so successful, why is it that so few investors actually use this approach to construct and manage their portfolios?  Good question and one that likely has a scores of answers. Here are a few to consider.

1.  There is a large collection of investors who are confident they can beat the market.  Ego certainly enters into this thinking.  Why would I be investing if I did not think I could outsmart the majority of other investors?

2.  Index investing does not have "water cooler" appeal.  For some reason, discussing specific companies generates more interest than talking about a broad asset classes.

3.  Active investors are influenced by Wall Street buzz and advertisements.  Millions of dollars are spent hooking investors and feeding them active management propaganda.  This comes from newsletters, business magazines, television business shows, and friends who don't know there is another choice.

4.  I maintain one of the biggest reasons investors continue down the active management path is that they don't have a clue how well their portfolio is performing when measured against an appropriate benchmark.  In addition, they do not take portfolio risk into account.  Even if they think about risk, they have no way to accurately measure it.

Remember, you cannot manage what you do not measure.