Austin American-Statesman from Austin, Texas • E1

I pays to be a lazy investor. I did not come to this conclusion happily. The grim truth is that lazy investing requires me to work harder as a journalist. And when it comes to work, I would rather have lunch. Allow me to explain.

When I wrote my column from Boston in the late 1970s, nothing made life easier than going to lunch with a fund manager. I asked questions, usually over a good steak at a nice restaurant. I dutifully reported the account of how brilliant strategy resulted in superior performance. The top-gun managers spoke in good quote, sometimes with a touch of humor. The less stellar managers were never allowed to see the light of day, let alone talk with a journalist.

And there was a constant supply of new stellar managers, so I never lacked for subject matter. Life was good. Unfortunately, I began to notice that most stellar managers were that only for a short time. They had their 15 minutes of fame and superior performance. Then they sank into obscurity, often richly deserved.

Few reigned long enough to merit a second lunch. I saw that only a fraction of fund managers beat the index they were supposed to trounce. There was just a handful of index mutual funds in the late so there much I could do with this grim knowledge. Like it or not, investors had to choose among managers who were supposed to be superior but usually Today, things are different. been able to write about low-cost index fund portfolios for many years.

And it keeps getting better. Expenses continue to decline. The number of index funds continues to increase. Today a do-it-yourself investor can easily build a well-diversified portfolio with very low costs. With truly minimal effort, anyone with a pulse can beat the majority of professional managers.

You can do it with my Couch Potato Building Block portfolios a simple set of self-managed portfolios that start with two index funds and build to 10, adding investment categories along the way. You can also do it with other lazy portfolios. And there are quite a few, such as William Portfolio, Andrew Lazy Portfolio, the Yale Model portfolio, the Coffeehouse portfolios altogether, a total of 29 lazy investor portfolios. And more to come. Over the past five years, for instance, the average annualized return of the 12 lazy portfolios that Morningstar would call moderate allocation was 4.25 percent.

The top performance in the group was 5.1 percent. The lowest performance was 3.1 percent. The average performance of the 222 managed moderate allocation funds with ve-year track records was a meager 2.54 percent. The best performing lazy portfolio would have ranked in the top 4 percent of Do I have to say it again? Lazy investing as good as any SCOTT BURNS See BURNS By Rachel Beck, Pallavi Gogoi and Bernard Condon Assoc IA ted Press NEW YORK The Wall Street insider-trading investigation could lead everyday investors already rattled by a stock market meltdown, a one-day and the Madoff scandal tonally conclude that the game is rigged. large part of trading has to do with trust, and I have said Mark Swenson, a 43-year-old plumber from New Hampshire who said he refuses to buy individual stocks.

a stock moves up 10 percent, you know he said. can pretend that everyone has access to the same information, but they Even before the news that federal investigators were looking into whether hedge funds traded on inside information, smalltime investors were pulling their money out of stocks despite a remarkable run for the market since the spring of 2009. Americans have pulled $60 billion out of U.S. stock funds this year, according to the Investment Company Institute, a trade group. Meanwhile, investors have piled money into Treasurys and bond funds that are considered safer investments, even if they return as much money.

At the same time, banks have reported that money is moving into checking and savings accounts. natural for people worried about their jobs or the falling value of their homes to sock cash into more conservative investments. But this has been no typical recession. It has coincided with turmoil in the stock market that goes back a decade, to the collapse of the Internet bubble and portfolio-draining scandals involving high- ying companies such as Enron and WorldCom. More recently, investors lived through the housing bubble and the collapse of Wall Street rms like Bear Stearns and Lehman Brothers.

On top of that came news that financier Bernard Madoff had bilked investors out of billions. everyone on the Street believes there are signi cant improprieties, and I think there is an even more important point for the massive number of investors who are not Wall Street players. And that is for most of us, you beat these guys at their own said former New York Gov. Eliot Spitzer, who built his political career prosecuting white-collar crime as that attorney general. People are nervous about the state of their assets, plus job insecurity and slow economic growth overall.

Some pros on Wall Street say hesitation by small investors is good news. It means that plenty of to propel the market higher in the next few months when and if the little guy nally relents and joins in the rally. The insider-trading investigation could test that theory. Insider trading inquiry may be last straw for lay investors FINANCIAL INDUSTRY OVERSIGHT crutiny of funds could spur swearing off of stocks again David Karp 2009 A ssoc IA ted ress Billions of dollars were lost in Bernard long-running Ponzi scheme, but the cost in investor con dence is incalculable (though the $60 billion withdrawn from U.S. stock funds this year may be some indication).

See TRADING By Brian Gaar AM er I AN- st A tes MAN st AFF arren Spector is a huge Disney fan, to say the least. His office at Junction Point Studios off North MoPac Boulevard is a trove of Disney memorabilia: original posters, figures and books, for starters. And in designing the new Epic video game for the Nintendo Wii console, Spector got to indulge in a fantasy: to work directly with the source material. Especially that most famous of Disney characters, Mickey Mouse. And Mickey might be a ticket to the mainstream for the 55-year-old Spector, a well-known developer who has long been a darling of critics and hard-core gamers.

Given high-pro le status (not to mention a certain iconic subject), could be one of the biggest games to come out of Austin in years, perhaps dating back to in the late 1990s. The project, set to be released Tuesday, is by far the biggest Spector has ever worked on. In movie terms, comparable to the opportunity former cult favorite director Sam Raimi got to direct the big-budget Hollywood blockbuster Development of began in earnest in early 2008, and about 130 people worked on it at Junction Point, which was sold to Disney in 2007. Another 150 contributed to the project from Austin game designer gets to reimagine Disney landscape on scale ID eo GA me DEVELO pm ENT Redrawing Mickey Deborah Cannon AM er I AN- st A tes MAN Developer and Disney fan Warren Spector led his Junction Point Studios, based in North Austin, in the creation of Epic Spector was able to draw new talent to Austin in the process. See REDRAW dI ey I ter A ct I ve oN AG For Warren Spector, is latest project to bear stamp of storytelling influences statesman.com See more photos and a video of Warren Spector discussing In The Wall ree Journal Sunday Giving a real gift Parents and grandparents can go beyond the latest electronics or plastic toys this holiday season.

Our guide to giving the gifts of investing. The Aggregator In some markets, homebuyers are again locked in bidding wars. Careers What you need to know about jobs requiring security clearances. WSJ 1-3 Com I ng onday Planning for the next century National Instruments has quietly grown into a force in the test and measurement industry growth the Austin CEO credits to a long-term strategy. In TechMonday Andy Rash The Wall ree Journal INFO TO GO Got an iPhone? Want local business news on the fly? Get the free app at statesman.com/iphone BUSINESS PERSONAL FINANCE statesman.com austin360.com ST WC SUNDAY, November 28, 2010 SECTION Check out staff blogs on just about every business topic under the Central Texas sun at statesman.com/business STATESMAN.COM.