Paul B. Farrell, a long-time columnist with MarketWatch, seems to have taken leave of his senses.
For years, Farrell has been a staunch defender of index investing, and he has tracked the performance of eight Lazy Portfolios of index funds and ETFs, each created by popular finance authors or prominent investment advisors. (All of them are designed for American investors, but Canadians can easily modify them.)
On July 13, Farrell wrote a column announcing that all of the funds in the Lazy Portfolios finally have a 10-year track record. So for the first time, he was able to review their decade-long performance, and the results were that all of them beat the S&P 500. Granted, the S&P 500 returned –1.59% over those 10 years, which means my chequing account was a better investment, and a large-cap US index is not an appropriate benchmark for a diversified portfolio. But in any case, most of the Lazy Portfolios managed to eke out gains between 2% and 5% during a decade that started and ended with massive crashes, which is a relatively good result.
The problem is that Farrell isn’t following his own advice.