Criticising an opinion by someone like Warren Buffet clearly has to be done with a lot of cautious. I wonder if those who strongly attacked him in these comments appear on Fortune’s rankings. Having say this (nothing personal), what Buffet clearly points out is the fact demonstrated by almost all serious academic research that except for some exceptional and very rare managers, active-managed mutual funds cannot obtain consistent extraordinary results on a risk-adjusted basis and that keeping transaction cost low in an index fund is one of the strategies to follow in the long term.

To contribute to the discussion, it is important to consider for long term investing the expected equity risk premium for stocks in the next decades. As the excellent Research Foundation’s monograph by Hammond, Leibowitz and Siegel “Rethinking the Equity Risk Premium”, it is very probable that we will see much lower excess returns on equity than we used to and that return on fixed-income products will provide better performance than in the recent past. In this respect, investing a larger proportion in high-grade bonds should not be disregard so easily.