Quote: John C Boyle
Little Book of Commonsense Investing

The ‘haystack’ that J.C Boyle refers to in this quote is a stock market portfolio that is available through an indexed fund. This strategy of investing is a passive option that focuses on returns while minimizing buying and selling (1). Even Warren Buffet, one of the world’s richest people and best known for being one of the world’s most successful investors, left instructions in his will that in managing his wife’s trust he directed 90% of assets to be in an Indexed Fund ~ he brought the haystack rather than looking for the needle (2).

The concept of ‘looking for the needle’ is more aligned to active investing, where fund managers are paid to predict and anticipate expected increases and returns pertaining to individually listed companies, often buying and selling in the short term to make a profit. Research has shown that only 13% of active fund managers have been able to successfully compete with Indexed Funds over the last five years (1). This is a low figure when taking into account the higher fees and charges that active fund managers charge.

“Remember, O reader, that arithmetic is the first of the sciences and the mother of safety.”

Justice Brandeis

However, when you ‘buy the haystack’ you are purchasing a collection or group of companies, an Indexed Fund, that allows you to earn your fair share of whatever returns – positive or negative – the stock prices and dividends deliver.

In summary, Clifford S. Asness, managing and founding principal of AQR Capital Management, adds his own wisdom, expertise and integrity: “Market-cap based indexing will never be driven from its deserved perch as core and deserved king of the investment world. It is what we should all own in theory, and it has delivered low-cost equity returns to a great mass of investors…. The now and forever king of the hill”. (2)

For over 34 years at Income Solutions, the investment philosophy of ‘owning the haystack’ rather than ‘looking for the needle’ continues to deliver solid, consistent and reliable investment returns for our clients that provides them with a long-term passive income into the future and a foundation for intergenerational wealth.

(1) https://www.investopedia.com/terms/p/passiveinvesting.asp

(2) The Little Book of Common Sense Investing, John C. Bogle