Believe and Obey

A Radical Christian Perspective on the World's News & Current Events

Current Macro Indicators: Updated June 7, 2024

Believe and Obey Recession Indicator: 100%

Believe and Obey  Bubble Barometer: 276.07

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A Prudent Money Plan for God's People

Below is a sound, conservative investment philosophy for your consideration.  I am not guaranteeing success, nor am I saying this is the only way to succeed.  I am saying that this makes sense to me, and it is, in fact, the way I invest my own long-term assets.  

DISCLAIMER is not a registered investment, legal or tax advisor or a broker/ dealer. All investment/ financial opinions expressed by are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.

Our content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on our Website and wish to rely upon, whether for the purpose of making an investment decision or otherwise.



The Believe and Obey philosophy stands upon 4 pillars:

  1. Low cost: As is discussed below the key driver of long-term investment performance is keeping expenses low.  This is as true in investing as in any other business.  Most of the underperformance of the average investor can be explained by fees that are too high.  This is what leads us to passive management via ETFs, as we shall see.
  2. Simple Strategy: An investment strategy should be simple enough for the non-professional to implement.  It is like a light switch; you don’t need to know all the intricacies of the power grid that stands behind it, only when to turn the switch off and on.  This plan tells you exactly when to make a move and does so in plain language.
  3. Rule Based: The temptation to play “hunches” and follow your gut is a sure path to subpar investment returns.  Successful investors have a rule or set of rules that guide their investment actions.  The heat of the moment is no time to formulate strategy.  Choose a strategy that makes sense; look at the back testing, then follow the rule.  Rules based investing removes much of the emotions that can ruin an investment plan.
  4. Emotionally Attainable: This is key.  All the previous three pillars are for naught if the plan is not emotionally attainable.  By this we mean that a plan that expects you to completely ride out gut wrenching downdrafts is simply not realistic.  Most investors bailed out during the massive drops in 2008-2009, locking in substantial losses.  Investors have a long well-documented history of bailing out near the bottom of downdrafts due to emotional distress.  The Believe and Obey Plan is crafted such that you will be safely on the sidelines during such traumatic events.

Let us now turn to the actual methodology of The Believe and Obey Plan


The Need for Passive Investing:

Active investing requires a hands-on approach, typically by a portfolio manager or other so-called active participant. Passive investing involves less buying and selling and often results in investors buying index funds or other mutual funds.

The prime example of a passive approach is to buy an index fund that follows one of the major indices like the S&P 500 or Dow Jones. Whenever these indices switch up their constituents, the index funds that follow them automatically switch up their holdings by selling the stock that’s leaving and buying the stock that’s becoming part of the index. This is why it’s such a big deal when a company becomes big enough to be included in one of the major indices: It guarantees that the stock will become a core holding in thousands of major funds.

Some of the key benefits of passive investing are:

  • Ultra-low fees: There’s nobody picking stocks, so oversight is much less expensive. Passive funds simply follow the index they use as their benchmark.
  • Transparency: It is always clear which assets are in an index fund.
  • Tax efficiency: Their buy-and-hold strategy doesn’t typically result in a massive capital gains tax for the year.

Active strategies have these shortcomings:

  • Very expensive: Thomson Reuters Lipper pegs the average expense ratio at 1.4 percent for an actively managed equity fund, compared to only 0.6 percent for the average passive equity fund. Fees are higher because all that active buying and selling triggers transaction costs, not to mention that you’re paying the salaries of the analyst team researching equity picks. All those fees over decades of investing can kill returns.
  • Active risk: Active managers are free to buy any investment they think would bring high returns, which is great when the analysts are right but terrible when they’re wrong.

So, which of these strategies makes investors more money? You’d think a professional money manager’s capability would trump a basic index fund. But they don’t. If we look at superficial performance results, passive investing works best for most investors. Study after study (over decades) shows disappointing results for the active managers.  This piece from Morningstar goes into more detail.

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