Updated: May 6
At Wealth Engagement, we love the movie Moneyball starring Brad Pitt and Jonah Hill. It showed that baseball’s conventional wisdom about how to value players was dead wrong. Instead, Pitt and Hill’s characters trusted the numbers and ran the team like a hedge fund by making every dollar work harder.
Wall Street Gets it Wrong
We think Wall Street’s conventional wisdom is also wrong. Mutual fund managers think they can pick stocks, swing for the fences, and beat market index averages like the S&P 500. These star fund managers are expensive to hire, and it doesn’t make them any more likely to beat the averages. And in fact, they don’t — SPIVA (S&P Indices vs Active) statistics show that 75% of managers underperform the S&P 500, and it is your money that is paying for their poor performance.
How We Do It
Like the magic of Moneyball, we partner with each client to understand their personal financial priorities, so we can develop a customized blueprint and investment strategy.
For a bit of inside baseball from my experience on Wall Street, the actively managed funds with high administrative fees rarely beat their benchmark averages. Similar to Billy Beane’s strategy of picking low-cost players who beat the rich teams that hired expensive players, it is often better to invest in low-cost ETFs that track the market averages.
Curious to Learn More?
Schedule a free consultation with me to become the hero of your own financial journey and get engaged with your wealth.
I look forward to speaking with you soon!