Is Long-Term Passive Investment Still a Thing?

In 2007, Warren Buffett made a bet with Protege Partners, a New York-based asset management firm. Buffett wagered that a low-cost S&P 500 index fund would outperform a selection of actively managed hedge funds over a period of ten years. Buffett's bet underscored his belief in the efficacy of low-cost, passive index fund investing over the long term.

When the bet concluded in 2017, the index fund had significantly surpassed the performance of the hedge funds. It highlighted the challenges faced by many actively managed funds in consistently outperforming the broader market after factoring in fees and expenses.

However, considering today's rapidly changing world, is long-term passive investment still viable?

Below are the recent and major events happening around the world:

👉Rise and fall of NFT

👉Volatility of cryptocurrency

👉Decentralization of Web3

👉Breakthroughs of AI

👉Geopolitical uncertainties

👉Class solidification

👉Rapid changes in consumer behaviour due to trends and fads

Venturing into the realm of long-term passive investment entails a strategic approach of acquiring and holding assets for an extended duration, often without actively managing them. This approach relies on the principle of compounding returns over time.

Since investment can help prevent inflation from eroding our income and, even better, increase our net worth, the question arises: How do we do it?

1. Rethinking Risk: While holding onto assets for the long term can mitigate short-term fluctuations, it also exposes investors to the risk of missing out on emerging opportunities or failing to adapt to changing market conditions.

2. Adaptability and Flexibility: Regularly reassessing investment portfolios, reallocating assets based on changing trends, and actively seeking out new opportunities.

3. Diversification and Innovation: Investing in innovative industries or companies positioned to thrive in a rapidly changing landscape can potentially yield higher returns over the long term. However, maintaining a diversified portfolio that incorporates short, mid to long-term tenures helps catering to high growth potential while providing financial security.

4. Active Involvement vs. Passive Observation: While the term "passive" implies a hands-off approach, successful long-term investing may require a degree of active involvement. This could involve staying informed about market trends, monitoring portfolio performance, and being prepared to make adjustments when necessary. However, unnecessary transactions may entail exorbitant fees while imprudent investments can lead to losses, thus seeking counsel from seasoned financial advisors is recommended.

5. Risk Management Strategies: This may include setting clear investment objectives, establishing stop-loss mechanisms, and maintaining a diversified portfolio. Park some of your money in the money market, government bonds, gold, or fixed deposits can help hedge against inflation while providing a stable return and medium-to-high liquidity.

6. Informed Investors: By staying ahead of emerging trends and technological advancements, investors can maximize returns while minimizing risk. While regulatory uncertainty, changes in interest rates and the recent removal of Special Account (SA) may create short-term volatility, investors who stay informed and adapt to changing regulations can navigate these challenges effectively. (Or you can follow me to keep yourself updated! :))

History often repeats itself time after time, and examining past events can provide valuable insights into navigating uncertain times and making informed investment decisions.

1. Market Crashes and Economic Downturns: Great Depression of the 1930s, the Dot-com Bubble Burst in the early 2000s, and the Global Financial Crisis in 2008.

2. Geopolitical Instability and Conflicts: World War I and World War II, the Cold War era, and more recent conflicts in the Middle East.

3. Technological Disruptions and Innovation: Industrial Revolution to Artificial Intelligence (AI), technological innovations have reshaped economies and created both opportunities and challenges for investors.

4. Inflation and Currency Devaluation: Hyperinflation in Weimar Germany, Zimbabwe and Venezuela, and a more recent episode of bankruptcy of Sri Lanka.

5. Regulatory Changes and Policy Shifts: Changes in interest rates, tax laws, and trade policies.

History teaches us that while there are risks and challenges associated with investing, disciplined and informed investors who maintain a long-term perspective can still achieve favourable outcomes over time. By learning from past events, diversifying investments, and staying focused on long-term goals, we can navigate uncertain times and even capitalize on opportunities presented by market downturns.

在2007年，沃伦·巴菲特（Warren Buffett）与纽约一家资产管理公司 Protege Partners 进行了一项赌注。巴菲特打赌，一只低成本的标普500指数基金（S&P 500）会在未来十年的表现中胜过一篮子由对冲基金组成的投资组合。巴菲特的赌注凸显了他对长期投资（passive index fund）效果的信心。

当这项赌注于2017年结束时，指数基金的表现显著超过了对冲基金。这突显了许多主动管理基金在考虑到费用和开支后仍需战胜广泛市场的挑战。

然而，考虑到当今瞬息万变的世界，长期 passively 投资仍然可行吗？

以下是世界各地最近的重大事件：

👉NFT 的兴起和衰落

👉加密货币的波动

👉Web3 的去中心化

👉人工智能的突破

👉地缘政治的不确定性

👉阶级巩固

👉由于趋势和时尚的迅速变化导致消费行为的快速变化

长期被动投资涉足长期获取并持有资产，这种方法依赖于长期的复利回报，也通常不积极管理其资产。

既然投资可以防止通货膨胀侵蚀我们的收入并增加我们的资产，那么我们该如何做呢？

1. 重新思考风险：长期持有资产可以减少短期波动的影响，但也会使投资者面临错过新机会或未能适应市场变化的风险。

2. 适应性与灵活性：定期重新评估投资组合，在变化的趋势下重新配置资产，并积极寻找新的机会。

3. 多样化与创新：投资于创新产业或处于有利位置的公司，以在快速变化的环境中取得更高的回报。然而，保持多样化的投资组合，结合短期、中期和长期的期限，有助于提高资产的增长，同时保障财务的安quan。

4. 积极参与与被动观察：虽然“被动”一词意味着不积极的方式，但成功的长期投资可能需要一定程度的积极参与。这可能涉及了了解市场趋势、监控投资组合绩效，并在必要时做出调整。然而，不必要的交易可能会导致过高的费用或不慎重的投资也可能造成损失，因此寻求靠谱的金融顾问的建议也是尤其重要。

5. 风险管理策略：这可能包括设定明确的投资目标、建立止损机制和保持多样化的投资组合。将一部分资金投入货币市场、政fu债券、黄金或定期存款中，有助于对冲通货膨胀，同时提供稳定的回报和流动性。

6. 知情投资者：通过及时了解新趋势和科技发展，投资者可以实现高回报，同时将风险降至最低。尽管监管不确定性、利率变动以及近期取消的Special Account （SA）可能会引起短期波动，但随时了解并迅速适应的投资者可以有效地应对这些挑战。（或者你可以关注我的更新 :)）

历史往往一再重演，审视过去的事件可以为我们的投资策略提供宝贵的见解。

1. 市场崩盘和经济衰退：上世纪30年代的大萧条，21世纪初的互联网泡沫破裂以及2008年的全球金融危机。

2. 地缘政治不稳定和冲突：第yi次世界大战和第二次世界大战，冷战时期以及最近中东地区的冲突。

3. 技术颠覆和创新：从工业革命到数字革命，技术创新已经重塑了经济，为投资者创造了机会，也带来了挑战。

4. 通货膨胀和货币贬值：魏玛德国的恶性通货膨胀以及津巴布韦和委内瑞拉等的通膨事件，还有最近的斯里兰卡的破产。

5. 监管变化和政策转变：利率、税法变动和贸易政策的调整。

历史告诉我们，尽管投资存在风险和挑战，但成为一个有纪律和知情的投资者，并保持长期的视角，我们仍然可以获得丰厚的回报。通过从过去的事件中汲取经验和教训，分散投资，以及专注于长期的财务目标，这让我们可以在不确定时期应对得当，甚至充分利用市场的下跌来获利。