Ben Stein writes a column for Yahoo Finance. I don’t always agree with his advice, but I do like his commitment to low-cost index funds and long-term investing.
In this article on CNN Money, Mr. Stein makes some great points. When the interviewer asks him about the consequences of an impending recession, Ben says:
“I’m worried that my wife smokes and that I eat too much. I’m worried about al Qaeda and unethical behavior on Wall Street but not about the economy. If there’s a recession, I’d buy stocks. That’s when you make money: when markets are spooked. In fact, I’m buying now.”
Then the interviewer asks him what he’s buying:
“Index funds. Exchange-traded funds, all based on broad domestic and foreign indexes. Trying to pick individual stocks is a trap. I can’t do it. Warren Buffett can, but hardly anyone else can beat the indexes over a long period of time.”
The interviewer asks Ben why he invests if Wall Street manipulates the market:
“Traders can cause short-term volatility. In the long run, the market must revert to a sensible price/earnings multiple.”
Conclusion
Ben’s advice is good. Buying low expense exchange-traded funds, especially when the market is down, is a solid strategy for most investors.
By the way, if you don’t know Ben Stein you need to go to Amazon and buy Ferris Bueller’s Day Off