Why Passive Investors Must Beat Active Investors (on average): Index and Chill Episode 1

Vanguard Lifestrategy Moderate: (Passively managed) - 60/40 - growth of $10,000 over 28 years - $70,681.
Vanguard STAR Fund: (Actively managed) - 60/40 - growth of $10,000 over 28 years - $95,823.
Vanguard Lifestrategy Conservative: (Passively managed) - 40/60 - growth of $10,000 over 28 years - $55,792.
Vanguard Wellesley: (Actively managed) - 40/60 - growth of $10,000 over 28 years - $81,986.

Great video! Very informative as always! I invest in ETF’s , I guess I am passive investor. I tried some stocks and lost a lot of money. Now, I need to be patient and hope the stocks go up again.

As always very informative and needs to be messaged to the public at large.

So, you're saying that Dividend investing always wins? Got it.

Wondering why the latest video was removed.

Great video Justin! I never realized that the combined return of all active investors before costs must equal the combined return of passive investors and of the market. Great stuff!

Keep calm and index on.

As always, thank-you for the great analysis. I manage my own investments based on the free education that both you and Dan have provided over the years. I'm not a client of PWL, but I've referred friends that were not willing or able to manage their own money. Why people would call you out for charging a nominal fee for portfolio management is perplexing. Perhaps they expect you to provide that for free as well?

By definition, a passive investor holds all of his investments in the market all 365 days of the year. Yet, most financial advisors will recommend investing through dollar-cost-averaging. Claiming that it will likely perform better than being a totally passive investor from day 1.
The problem with passive investing is just that. You will never do better or worse than the market. In other words, you are at the complete mercy of the market. On the other hand, an active investor will at least have some control and will be able to react to the market if necessary. A minimal amount of active management is all it takes for a cautious active investor to beat the overall return of the market.

How can we be so sure that the allocation to specific stocks among active and passive investors as a group is homogenous? I would agree that passive investors as a group probably hold a collective portfolio that is close to the total Canadian market, however, active investors seem to favour certain stocks like Air Canada, Shopify and high dividend yielders like Enbridge. Combined the two groups amount to the total return of the stock market before fees, but that doesn't automatically mean that their components are the same or that they hold the same percentage allocation within their portfolios. In your example, you make this assertion without any proof that it is so.

Nice video!! I like to pick a decent selection of blue chip companies across various sectors and dollar cost average over time

Thank you. Any names you can suggest?

Thanks for sharing the wisdom. Vast majority of my portfolio loaded with xgro but second guessing that as holding xic and/or voo would've provided massively greater returns looking at the 5/10 year back test. Thoughts?

You at PWL underperform passive investors because of your fees, correct?

Just as fun news about Tesla and Twitter flooding into my feed, you threw in one single video that allowed me to purchase more VGRO today. Thanks :)

Great video as always! I can’t help it, I love active investors. I mean, I am a grateful person and I feel I need to give thanks to those who are growing my passive investments. “Be a stamp and stick to it” some of the best words ever spoken regarding passive investing.

This channel is very underappreciated.

This is such a brilliant channel, thank you for your years of hard work. It's helped me gain a foothold into passive investing where I otherwise wouldn't have felt comfortable enough to make decisions.

Correct me if I'm wrong, but this also applies to market timing? i.e let's say every investor holds a market-cap weighted index fund. One buys and holds, while the other tries to time the high and lows. On average, the market timer will receive the market returns minus trading costs.

Timely information. Thanks Justin for all you do!