Quote Of The Week: With Investing, Beware TMI (Too Much Information)

joe mansueto

Morningstar founder Joe Mansueto, whose little company started in his Chicago apartment revolutionized the investment industry

Morningstar founder and CEO Joe Mansueto just retired after 33 years. The company he started in his Chicago apartment – and that turned him into a billionaire – is now the go-to source for information and analysis on mutual funds, exchange traded funds and all kinds of investment products in what is now a $16 trillion+ industry.

It’s hard to read Money magazine or any other financial publication without running across a reference to Morningstar and its investment research.

“Too much information”

In a recent interview, Mansueto talked about the wealth of investment information now available to the financial consumer, thanks in no small part to Morningstar research, and discussed whether there’s a downside to TMI – or “too much information.”

Here’s what he said:

“…Making institutional-quality information available to individuals at low or no cost … empowers investors to take control of their own financial future.

Actually there is one possible downside: with the flood of real-time information, people tend to trade too much. It’s much harder to be a buy and hold investor now. Information can induce people to sell too quickly. You want to ride through volatility. The biggest mistake in 2008-2009 was selling.”

Advocate for active and passive

Another surprise? Mansueto comes out as a strong advocate of both passive (index) and active (managed) investment strategies. “There’s a strong case for both active and passive funds,” he argues. “Active management still has great potential.”

 

 

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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