One of my favorite blogs on common sense investing is Bogleheads.org. I recently stumbled across a blog that Taylor Larimore  wrote back in December, 2010 on the Bogleheads blog. In this blog Taylor listed many excerpts that were direct quotes from a book titled “The Power of Passive Investing” by Richard A. Ferri. This book by Rick Ferri is loaded with common sense and logic based on facts from years of academic studies which support the merits of taking the Strategic Approach to investing using a diversified passive portfolio of low cost index funds for your long term investing goals.  I feel some of the excerpts that Taylor made from Rick ‘s book in his blog are well worth repeating. Here they are:

“Passive investors who buy the market will capture better results than most active investors who try to beat the market.”

“The path to changing from an active strategy mindset to a successful passive one is based on exposure, education, understanding, belief, and commitment.”

“Wall Street promotes the possibility of earning superior returns–not the probability.”

“Investment  greats such as Warren Buffet, Peter Lynch, and David Swenson are all outspoken advocates for passive investing. In addition, the U.S. government’s Thrift Savings Plan (TSP) for federal employees has only passive investment options available for participants.”

“Active management was exposed as a loser’s bet many decades ago by the academic community.”

“Academics began studying mutual funds in the 1960s to discover managers who had skill. Their efforts were unsuccessful back then and new efforts remain unsuccessful today.”

“The Vanguard 500 Index Fund beat over 85% of actively managed funds during the 25 year period (1984-2009) — even before making adjustments for terminated funds,funds, risk factors, sales loads, and taxes.”

“The S&P benchmarks outperformed the active managers in most style  and size group over most periods.”

“Their is one smear on the impressive growth in index funds and ETFs. It’s the invasion of active management into the index fund space.”

“Passive investors would be wise to avoid these (actively managed) pseudo-index funds and stay true to the lowest-cost index funds and ETFs that follow market benchmarks.”

“An overwhelming percentage of investors select mutual funds based almost exclusively on past performance. Their underlying assumption for relying on past results is that it has predictive value. Not so.”

“The winning active managers in one period are typically not the winning managers in the next.”

“The #1 large blend fund (out of 552 L.B. funds) in 2008 finished dead last in 2009.”

“Wall Street and the actively managed mutual fund industry spend an inordinate amount of money flooding the airways, print media, and Internet with messages about how their active strategies will either save you from calamity or make you rich.”

“Wall Street know that the more confused and off balance you are about investing, the more money they’ll make.”

“Ideally the place or person where you get your advice isn’t compensated to sell high fee products and services.”

“Advisors come in two types: registered investment advisors (RIA) who are legal fiduciaries, and brokerage firm representatives who aren’t.”

“The biggest challenge when hiring an advisor is finding one who is truly knowledgeable about passive investing and committed to the strategy.”

An active strategy, whether based on picking securities, selecting active funds, or market timing may be successful for months or even years, but over the longer term of 10 years or more most investors are better serve by a strategic or passive approach.

So turn off the noise of CNBC’s talking heads and Wall Street’s army of commission driven sales forces and let Alhambra Investment Partners construct for you a globally diversified portfolios of low cost index funds across a variety of asset classes (stocks, bonds, real estate, and commodities) that matches your financial goals and risk tolerances.