First, it’s fine to invest in index funds. I agree that this is what most investors ought to do. But I don’t think this sort of blanket advice is necessarily useful for every investor.
For some people out there, they are more inclined to be enterprising investors. They have the right stuff, as it were. They are inclined to learn about businesses and to do research.
For these people, there’s no need to invest in an index. That’s a waste. Imagine if Warren Buffet had grown up today and instead of running Berkshire Hathaway, had decided to put his money into an index fund.
Can you imagine what the world would have lost? I mean, I don’ t know all of the specifics of Berkshire, but I assume that–given that it’s one of the largest companies in the world–it creates a lot of value. I mean, Geico gets people cheap(ish) car insurance, right? Without Warren, would their even be a Geico?
And, right, okay, so all of the efficient market guys, you know. They’re like yadda yadda, markets are efficient, invest in index funds. And I’m like: okay, sure, but if markets are efficient, you can’t buy a mispriced security. It’s impossible. So it’s totally fine to pick and choose at random.
That’s the idea, you know. A different sort of margin of safety. One where everything is the right price. The price is always right. That sort of thing.
So what I’m saying is, when it comes to the best way to invest 20k, there are a lot of people out there who, okay, maybe not a lot, but at least some, who ought to go out there and kick the wheels of businesses and see what’s what and take a chance, you know?