Trader’s Narrative

The following is from San Francisco magazine (online). I’ve included it here because, for some odd reason, the original site shows it as a 404 error now. This is much too good to let disappear into the ether, so bookmark this, delicious it or just print it off and read it.

Just remember to not get drunk on the indexing Kool-Aid. All methods of investing are active, even indexes like the Dow Jones. Passivity does not exist. All indexes have their components picked by someone and regularly rebalanced and modified by someone (or some committee).

The best investment advice you’ll never get
For 35 years, Bay Area finance revolutionaries have been pushing a personal investing strategy that brokers despise and hope you ignore. The story of a rebellion that’s slowly but surely putting money into the pockets of millions of Americans, winning powerful converts, and making money managers from California Street to Wall Street squirm.
By Mark Dowie

As Google’s historic August 2004 IPO approached, the company’s senior vice president, Jonathan Rosenberg, realized he was about to spawn hundreds of impetuous young multimillionaires. They would, he feared, become the prey of Wall Street brokers, financial advisers, and wealth managers, all offering their own get-even-richer investment schemes. Scores of them from firms like J.P. Morgan Chase, UBS, Morgan Stanley, and Presidio Financial Partners were already circling company headquarters in Mountain View with hopes of presenting their wares to some soon-to-be-very-wealthy new clients.

Rosenberg didn’t turn the suitors away; he simply placed them in a holding pattern. Then, to protect Google’s staff, he proposed a series of in-house investment teach-ins, to be held before the investment counselors were given a green light to land. Company founders Sergey Brin and Larry Page and CEO Eric Schmidt were excited by the idea and gave it the go-ahead.

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