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When the Mean is Nice

KAHOOT VERSION

Investing

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1. In early 2024, breaking news about the stock market revealed that:

  1. A recession officially began in spring of 2024
  2. Most investments are now in low-cost index funds
  3. New technology is making it harder for average people to invest
  4. Stock trading was the most common job of 2024

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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1. In early 2024, breaking news about the stock market revealed that:

  • A recession officially began in spring of 2024
  • Most investments are now in low-cost index funds
  • New technology is making it harder for average people to invest
  • Stock trading was the most common job of 2024

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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2. Managers picking stocks charge about $0.66 per yr for every $100 managed. Choosing funds with no active manager costs:

  • an average of $0.01 per yr
  • an average of $0.05 per yr
  • an average of $0.10 per yr
  • an average of $0.50 per yr

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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2. Managers picking stocks charge about $0.66 per yr for every $100 managed. Choosing funds with no active manager costs:

  • an average of $0.01 per yr
  • an average of $0.05 per yr
  • an average of $0.10 per yr
  • an average of $0.50 per yr

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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3. Roughly what percentage of fund managers picking stocks actually do worse than the average of the stock market?

  • 10%
  • 50%
  • 75%
  • 90%

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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3. Roughly what percentage of fund managers picking stocks actually do worse than the average of the stock market?

  • 10%
  • 50%
  • 75%
  • 90%

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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4. Index funds are designed to...

  • Match the profits of a large group of stocks in the stock market
  • Beat the profits of a large group of stocks in the stock market
  • Make less profit than all the stocks in the stock market
  • Have no connection to the stock market at all

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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4. Index funds are designed to...

  • Match the profits of a large group of stocks in the stock market
  • Beat the profits of a large group of stocks in the stock market
  • Make less profit than all the stocks in the stock market
  • Have no connection to the stock market at all

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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5. As a result of the growing popularity of low-cost index funds...

  • Investment firms spend less on technology
  • More people are willing to pay a manager to invest for them
  • Less people now invest in stocks than ever
  • Investment firms are forced to cut fees in order to stay competitive

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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5. As a result of the growing popularity of low-cost index funds...

  • Investment firms spend less on technology
  • More people are willing to pay a manager to invest for them
  • Less people now invest in stocks than ever
  • Investment firms are forced to cut fees in order to stay competitive

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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You’ve completed the exercise, now it’s time to learn

more about the current event:

WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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Discussion Prompt:

Would you rather:

  1. pick a few individual stocks
  2. settle for the average profit of a really large group of stocks

Explain your answer.

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE

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Extend Your Learning

Relevant Resources from NGPF:

  • Investing in Funds (Lesson)
  • MOVE: Let’s Make a Mutual Fund (Activity)
  • NGPF Podcast: Burton Malkiel discusses his book, Random Walk Down Wall Street, and the

index fund revolution that followed (Podcast Episode)

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References:

  • Passive eclipses active in US fund market as assets swell to $13.3tn (Financial Times)
  • Average Equity and Bond Mutual Fund Expense Ratios Continue to Decline (ICI.org)
  • Trends in the Expenses and Fees of Funds, 2023 (ICI Report)
  • How YouTube Success Made MrBeast His $105M Net Worth (Money Made)

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WHEN THE MEAN IS NICE | JUNE 7, 2024 EDITION | NEXT GEN PERSONAL FINANCE