Originally posted on Being Classically Liberal :
This post was authored by Austin Henshaw. If the purpose of a college education is for students to learn, the academy is failing in its mission, according to Richard Arum’s Academically Adrift: Limited Learning on…
Hayek died 25 years ago on 23 March 1992.
David Boaz of Cato Institue pays a tribute:
Hayek lived long enough to see the rise and fall of fascism, national socialism, and Soviet communism. In the years since Hayek’s death economic freedom around the world has been increasing, and liberal values such as human rights, the rule of law, equal freedom under law, and free access to information have spread to new areas. But today liberalism is under challenge from such disparate yet symbiotic ideologies as resurgent leftism, right-wing authoritarian populism, and radical political Islamism. I am optimistic because I think that once people get a taste of freedom and prosperity, they want to keep it. The challenge for Hayekian liberals is to help people understand that freedom and prosperity depend on liberal values, the values explored and defended in his many books and articles.
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There is always one. Liran Einav had to be the only economist out of 100 or so top American and European economists who disagreed with the proposition that:
In general, absent any inside information, an equity investor can expect to do better by choosing a well-diversified, low-cost index fund than by picking a few stocks.
The New Zealand Superannuation Fund’s policy of active investing has one supporter out of 100 surveyed by the Initiative for Global Markets. I suppose it is better than none.
The chief executive of the fund quibbles by claiming there is a 3rd way between active and passive investing but there is not as William Sharp explained in his timeless 1991 article, The Arithmetic of Active Management:
- A passive investor always holds every security from the market, with each represented in the same manner as in the market. Thus if security X represents 3 per cent of the value of the securities in the market, a passive investor’s portfolio will have 3 per cent of its value invested in X. Equivalently, a passive manager will hold the same percentage of the total outstanding amount of each security in the market2.
- An active investor is one who is not passive. His or her portfolio will differ from that of the passive managers at some or all times. Because active managers usually act on perceptions of mispricing, and because such misperceptions change relatively frequently, such managers tend to trade fairly frequently — hence the term “active.”
An active fund is a fund that is not a passive fund. If you do not own a balanced portfolio of every security in the market, you are an active investor.
The majority of the New Zealand Superannuation fund is passively invested but some of it is not. It is invested in dogs like KiwiBank, in Z service stations and even in some bad Portuguese loans.
Originally posted on STOP THESE THINGS:
It happened in the blink of an eye: Australia went from energy heavyweight to a country in crisis looking for the equivalent of life support. Since STT got going in December 2012, we have…
Originally posted on The Risk-Monger:
This blog was originally published on 10 September 2015. Because of the length, it was originally done as a two-part blog – I have combined them here with minor edits. See the French translation for the…