Tim Price: The Signs Are Clear – Markets Overpriced

04.06.2016 • Investing

From London Investment Alert (GREAT BRITAIN)-

It is one of the saddest headlines you will ever see. The Financial Times this week reported that the amount of money invested in passive funds since the global financial crisis had grown by 230% to $6 trillion.
Don’t get me wrong. I’m all for low fees. It is universally acknowledged, and rightly so, that high fund management fees are a significant anchor that candrag down investment returns.
But the corollary does not follow. It is not automatically the case that a fund
with low fees is naturally a superior proposition. Starting values matter. In many cases,
they are practically the only thing that matters.
The single most important characteristic of any investment you make is the initial price you
pay for it. Whether you’re investing in shares, bonds, property, fine wine or classic cars,
what you pay on purchase will be the biggest driver of subsequent returns. Everything else
is of secondary importance. Price is what you pay. Value is what you get. (Or don’t get.)

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