In a recent article world famous multi billionaire, Warren Buffet was taken to task by another well known investor and financial expert, Timothy Armour.
For those who may not be familiar, Timothy Armour is a exceedingly successful Los Angeles based businessman, primarily known for his leadership of Capital Group’s (a well known financial service company) research arm in the capacity of Chairman and Chief Executive Officer.
Mr. Armour takes particular issue with some of Mr. Buffet’s positions concerning PIFs or Passive Index Funds. Armour criticism surrounded a recent financial charity endeavor wherein Mr. Buffet invested heavily in a passive index fund to the tune of one million dollars. Warren Buffet clearly believes that passive index funds are the best and safest way to a healthy and profitable financial portfolio, however, Mr. Armour adamantly disagrees. Though Armour notes that Passive Index Funds are a invaluable profit tool and should always be considered as a inexpensive addition to one’s portfolio, he disagrees with Mr. Buffet that PIFs are always the best and safest path to a safe and robust nest egg.
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The reasons for this are mainly in the inherent weakness of passive index funds to down or falling markets. This problem is made even bigger by the fact that PIFs have such a golden reputation and are considered extremely safe (in part due to Warren Buffets actions and past statements concerning them). Mr. Armour thinks this is a huge mistake as such investments leave investor open to one hundred percent market volatility which can cause massive losses in the long term if the market begins to take a downward spiral.
Learn more about Tim Armour at https://www.americanfunds.com/advisor/insights/market-commentary/tda-rwl-qavolatility.html.