Timothy Armour recently released a article detailing Warren Buffet’s recent statements concerning his newest charity investment, a lucrative deal which would net the maverick investor $ 1 million dollars by betting on a rather standard S & P passive index fund.
However, Mr. Armour disagrees with his older colleague. For those who may not be familiar, Timothy Armour is himself a very well traveled investment veteran who got his start within the industry working for the American financial service company, Capital Group straight after graduating from Middlebury College with a Bachelor’s degree in economics. Recently, Mr. Armour was granted a stunning promotion by being named chairman of Capital Group after the passing of the former company leader, Jim Rothenberg. Therefore, sufficient to say that when Mr. Armour speaks about investment he knows precisely what he is talking about and also went on to say in his piece that he has the utmost respect for Mr. Buffet, but that he had to respectfully disagree with the charity investment.
The reason for Mr. Armour’s critique, according to his article, stems from the fact that he fundamentally disagreed with Buffet’s notion that passive index returns are a safe and surefire way to navigate towards a better retirement. Mr. Armour very specifically states that he certainly believes that passive index investments have their place, it is simply that they do not provide any protection against down markets.
Armour backs up this assertion with some statistics he and his firm collected from surveys conducted the previous year wherein over 1200 investors when asked about passive index investments, did not know at all that such endeavors left them completely exposed to market volatility. It should be noted that Mr. Armour is not being hyperbolic when he says completely, by completely, he means %100 percent. This, obviously leaves passive index investors open to a whole host of issues and thinks that Mr. Warren Buffet should be having more conversations in the future about this very issue, as it is most certainly not the best, nor safest, path to a healthy nest egg.
Learn more about Tim Armour: https://www.ft.com/content/28953b12-dccb-11e6-86ac-f253db7791c6