A new film champions “passive investing.” But is that method overhyped?

Whether you are or not Funding -spokenOscar -winning director Erol Morris” ”Set the noise“It is a convincing documentary in time.

It is an attractive Cronic Investment shift From guess and Bowel feelings In a more scientific endeavor. It is a reminder of a era as many colleges pictures that we consider are now immersed – like Various wallet The benefits of the index fund – it was not always a common practice.

The film, available on YouTube, explores the rise of negative investment, individuals and conditions – such as the computer revolution – which dominates millions of retirement accounts for Americans.

But it also raises questions about the limits of negative investment and whether the days of its glory are over.

What is negative investment?

As the name suggests, this investment strategy does not try very difficult: it aims to repeat the performance of the market index instead of trying to excel it through daily trading or selection of stocks.

So, instead of choosing stocks or betting on the individual winners, negative investors buy and carry a wide and varied mix of assets, such as index boxes or boxes circulating on the stock exchange. The goal is to invest in long -term growth of the entire market, reduce costs and avoid market timing defects.

“Instead of withdrawing your hair and watching the financial news throughout the day, set noise,” says David Booth, founder of Dimenseal Fund Adviss. The investment company participated in the production of the documentary.

“Instead of overcoming the market, allow me to make all these thousands or millions of people who invest work for me. I will just sit and allow them to go out,” says Bath.

The attractiveness of financing as a science

The documentary traces the roots of the negative approach to a period of intellectual renaissance in the 1950s and 1960s, when a group of hungry young financial economists at the University of Chicago began challenging the traditional wisdom in Wall Street.

Before this era, most investors believed that the skilled professionals who were good knowledge could surpass the market by revealing hidden opportunities.

“The traditional wisdom at that time was to find a person with access to information, and he works hard – not to trust the markets to do his job,” says Eugene Fama, Director of Dimensiveal Fund Advisors and one of the Nobel Prize winners working in the company.

The film shows how these academics used sports data and models to put holes in this thinking.

The turning point came in 1952, when Harry Marquitz published his pioneering work in selecting the wallet. Markowitz’s vision was simple but deep: instead of focusing on individual stocks, investors must create a balance portfolio between risks and return through diversification.

By combining assets that do not move in Lockstep, the total risks of the wallet can be reduced even with remarkable returns. That was the birth of modern preservative, and it is now a joint strategy in the Financial Planning Tools Fund.

The revolution accelerated in the 1960s, as researchers such as Eugene Fama, Robert Merton and Mirin Scholes were able to take advantage of the newly -up data groups of market data.

“The market is a large information processing machine. If you are going to overcome the market, it must be faster,” says Bath in the movie. “Trying the market to excel is like a gambling – it is not investing.”

The “noise control” also highlights how these visions create index and democratic investment funds, allowing millions to participate in the market growth without the need to become financial experts.

These first pioneers of financial economy, by collecting and analyzing huge quantities of market data, laid the foundation that Jack Boughal, known as the name IndexingIt will be used later to create the first mutual material box aimed at Vanguard retail investors in 1976.

“Smart investors will use low -cost indicators to build a variety of stocks and bonds, and they will stay in the session,” Bulgel. He said New York Times in 2012.

Don’t go everything yet

While “noise control” can be a useful reminder to obtain a long -term approach to investment in the long run, it does not always apply, according to some investors.

Her Bengali Mali, which actively runs the governor of its customers through the asset management platform that focuses on women Consulting commonersHe says that the negative investment success rate depends on the economy and the type of course in which you are.

“If you, let’s say, in the shrinkage cycle, it works beautifully,” she said. “But now, as we enter a new economic cycle of inflation for 20 years, this may not work. This will not be from 15 to 20 years easy as the latter.”

In fact, researchers in Goldman Sachs expected that S&P 500 will only return a 3 % complex rate annually over the next ten yearsNoting that “the stocks will face intense competition from other assets during the next decade.” This may push more investors to search for higher returns through active management.

Mark Hauten, head of the global stock team at Liontrust, who was recently martyred in the market concentration, is standard margins and evaluation as major danger to the negative investment strategy.

And he said in Note published In January 2025. However, we are in or close to the peak in the direction that will make it very difficult to achieve a satisfactory return in stock markets through negative investment alone. The state of increasing active strategies is convincing.

Instead of confidence and transcription of the market blindly the way previous generations, consumers may consider a more creative strategy that combines active and negative investment, taking into account tolerance with risks and years before retirement.

Small S&P returns mean that more people will evaluate the customization of a 60-40 % portfolio, with 60 % shares and 40 % for bonds, and start searching for better returns elsewhere.

“If you are in the market period where there is stagnation or stagnation, then you are long on the market [alone] “You will not succeed, you must be active, and be short and long. This is something that people are not used to.”