Berkshire Hathaway Inc (BRK.B)

[bar1080]

About 35 years ago I went shopping for some mutual funds. I'd always owned some stocks and some individual bonds. But I was busy with business and figured I'd do the "mature" thing and let pros handle my stocks. Picked out three or four highly regarded low cost no-load funds.

That was around the time everyone was advising dollar cost averaging so I opened the accounts with small investments and had a rigid plan to invest more every two months. Even then I was well aware that most people buy/sell at the wrong times. Dollar averaging would reduce that risk.

From the start I could see those funds lag. Every month, every Quarter, every year my funds under-performed the S&P. I began to follow John Bogle's radical new ideas buried deep in Forbes, Barrons and the WSJ. Lord how brokers hated Bogle!

No matter the time frame, Bogle's dumb-dumb index funds topped my investments, and usually by a sizable amount. A year or two later I entered the Vanguard Total Market Index fund. From that time on, everything I invested was indexed. Later I picked up some individual blue chips for diversification. But even those stocks echoed the S&P 500, and they did great too. Without realizing it at first, I was coming around to the Buffett/Graham style... and doing very well with my money.

I never sold those first mutual funds nor added to them. One poor performer was merged out of existence... a technique mutual funds use to hide mistakes. One of the funds actually did pretty well... but still lagged the S&P (they rarely admit that).