I found your entry interesting do I’ve added a Trackback to it on my weblog …

Where are they? There are tons of different computational models in finance available today and if these sofwares are available on the internet, then perhaps they’re the unsophisticated ones, ie, easy to implement (algorithmic-wise). This is why quants are always developing (or looking ) new models for competitive advantage. Researchers have continuously published new models in the finance/economic literatures.

I’m fine with passive etf investing, but this guy wants to save you money on active management fees just to pay him a fee of a different kind (albeit much smaller i’m sure) for something that is available free online and very simple to do on your own. I smell deadpool.

The biggest problem with offering investment advice is the the catch-22 involved. Those who are actually smart enough to understand the principles involved (those who may have read David Swensen, for example) could do it alone. And those who haven’t, will never be able to comprehend and/or listen to why investing in a different manner (or at all) makes sense.

I attempted to start a similar company right out of college about 6 years ago and simply couldn’t convince the uninformed why they needed help. Best of luck.

Best of luck to these guys–the world certainly could use more informed investors.

For those who don’t know, Mr. Swensen is the portfolio manager of Yale’s endowment and has written a few books.

Would hope Mitch would give more credit next time.

G

Investors today must be intelligent to make good money. This could mean riding the winners and ditching the losers (there is a reason they are losers) and then eventually selling the winners for a reason, rather than simply the fact that they went up. Or, according to this guy, it could mean picking asset classes intelligently.

Brian

Of the people who have the necessary financial knowledge to appreciate what MarketRiders is doing, there are two fundamental types: aggressive investors and passive investors.

Aggressive investors think they can beat the market and aren’t going to like the autopilot approach.

Passive investors tend to want someone to handle their trading for them. If they’re worried about “getting fleeced” by high fees and biased advice, then they can use Financial Engines. And if the fees for having FE manage their account are unacceptable, then I could see an argument for a DIY market.

So there’s the market: sophisticated passive investors who want to save money by managing their own portfolio.

But then my question is: are these people even buying ETF’s? Because if you’re building a portfolio based on ETF’s, it implies you have exhausted your 401k (which typically DO NOT allow you to invest in ETF’s) and potentially other tax-advantaged accounts, which means you are putting away over $15k, possibly $30k per year (depending).

If you assume that 30k represents 15% of pre-tax income, we’re taking about people with at least a household income of $200k (probably quite a bit higher).

So then the market gets winnowed down further to sophisticated passive investors who want to save money by managing their own portfolio and make at least $200k per year.

The underlying theory is that an investor’s risk appetite and time preferences change with age in a predictable fashion.