Gone are the days when he was running around slapping buy recommendations on the same stocks that he was privately calling piles of dung. These days Henry Blodget sounds positively John Bogle-ish. In a column in the Huffington Post, Mr. Blodget urges readers to draw the right lessons from the massive insider-trading investigation currently underway in the United States. The lesson is not to give up on stocks altogether under the impression that the game is totally rigged against the little guy. The REAL lesson for retail investors, according to Mr. Blodget, is that “it’s basically idiotic to trade” because the game is similar to the New York Jets taking on a high school football team. No prizes for guessing which team small investors are playing on.
The solution? Playing the game we can win:
Long-term investing, preferably via low-cost, tax-efficient index funds.
Unlike professional investors, small investors don’t have to worry about their performance in a given week or month or year. They can avoid the second-to-second warfare that defines the professional investment business. They can be patient and allow Ben Graham’s long-term “weighing machine” to eventually do its work, rebalancing their portfolios to take advantage of the market’s never-ending cycles of fear and greed along the way.
If they do that, and keep their costs low enough, they’ll outperform 75% or more of the professionals.
Bogle couldn’t have said it better.