I just bought VFINX today

[lswswein]

Originally Posted by Grep

I have a theoretical question about indexing that has been bothering me for a while. Forgive me for using AirHead's troll thread to ask it.

Let's suppose that the entire world, bar none, decides that indexing is best, and everyone "buys the market" for all their investment needs, and never trades on market data, nor even watches the market data, etc., but only trades per their own (e.g. retirement) needs. Is it not possible that volatility in the markets would then be (1) smoothed substantially and (2) driven substantially by macro-economic forces (e.g. baby boomer's retirements, etc.) that are unrelated to market fundamentals? If this is true, what are the other ramifications? What percentage of all holdings are in broad index funds?

Thanks.

The numbers follow: btw I posted about this before -
http://early-retirement.org/forums/i...89291#msg89291
You should read the posts on that topic in the link - this has been discussed extensively and the synopsis is that we are so far away from even getting close to 20% of all invested funds being indexed that it is not an issue. Also MPT says that if everyone thinks it is a good idea and does it it will create inefficiences that will get exploited.

this is the data I collected for S&P 500 since that is the biggest Index - I think this is for 2004.

1. $626 billion is indexed to the S&P 500.
1a. $255 billion of S&P 500 indexing is by Mutual Funds - the rest is all the Institutional money not in mutual funds by indexed.
2. Float Adj Market Cap of S&P 500 is $11,000 billion

That's 6% guys and not that high. Also 10% of individual investors hold Index funds & 30% of Institutional Funds do so.

References:
www.ici.org
http://www.standardandpoors.com/
http://www.nasdaq.com/reference/IndexDescriptions.stm
http://www.ifa.com/

[ERD50]

Originally Posted by AirJordan

Ummm... look at the DFA staff, I'm pretty sure they've "discovered" it

got a link? - ERD50

[Alex]

Hey AJ - be a man, not a punk. Go ahead and post your current holdings and cost basis along with your subsequent trades here online. That way we 'helpless haystackers' can learn from your awesomeness. Otherwise I second the motion that you get a cup of STFU.

[JohnEyles]

Originally Posted by Alex

Hey AJ - be a man, not a punk.

And while you're at it, would you please stop implicitly comparing
yourself to Michael Jordan ? It's not appropriate. I know Michael
Jordan, and you sir are no ...

[AirJordan]

10k DODFX (Dodge and Cox)
8k RYVPX (Royce Value Plus)
5k FAIRX (Fairholme)
5k JSVAX (Janus Contrarian)
5k FBRVX (FBR Small Cap)
5k ARTKX (Artisan Small Cap)
10k VPCCX (Primecap Core)
10k PREOX (Perrit Emerging Ops.)

Beating Indexes is EZ

Also, I really don't like to trade, I'm more of a buy and hold type. I don't believe that panicing got anyone anywhere, and timing the market is too hard. If I wanted to trade I'd play with equities, but the consensus of the board is I'm not that smart...

[newyorklady]

more info on DFA please

[lswswein]

www.dfaus.com

[AirJordan]

Originally Posted by newyorklady

more info on DFA please

NYL, here's a good primer on them

http://www.thestreet.com/funds/mutua.../10038756.html

With the millions you have, DFA would be happy to take your money, and you wouldn't even have to lose the 1% to an advisor. IMHO, other than Dodge and Cox, DFA is the best fund family out there

[unclemick]

Hmmm - time for my 'graduate level' crusty curmudgeon lecture.

If you can't get a grip on hormones and insist on trying to beat indexes - you might as well go all the way to individual stocks AND go right to the top.

1. Never listen to men. Women are better at investing.

2. pssst Investment Quality Trends - at least the men are trained by Geraldine.

heh heh heh - for added points look up the Hulbert rating. BTY - as a fallback DFA is a good house but you still have the drag of their fees.

[AirJordan]

Originally Posted by unclemick2

Hmmm - time for my 'graduate level' crusty curmudgeon lecture.

If you can't get a grip on hormones and insist on trying to beat indexes - you might as well go all the way to individual stocks AND go right to the top.

I would mick, but I don't have the time, and effort to pick stocks, and find great ipo's, or undervalued companies. Picking mutual funds is what I'm content doing.

[brewer12345]

Originally Posted by AirJordan

Also, I really don't like to trade, I'm more of a buy and hold type.

So, you don't want to trade, but you like to buy mutual funds that do a lot of trading?

[AirJordan]

Originally Posted by brewer12345

So, you don't want to trade, but you like to buy mutual funds that do a lot of trading?

Not the case at all, I own FAIRX, DODFX, VPCCX, FBRVX, which all have turnover rates of 15% or less if I can remember correctly. No point owning funds in a taxable account, if the capital gains just eat you alive

[lswswein]

Originally Posted by AirJordan

I would mick, but I don't have the time, and effort to pick stocks, and find great ipo's, or undervalued companies. Picking mutual funds is what I'm content doing.

Stats say that it is more difficult to pick fund than stocks.

Total # of mutual funds: 8905
Total # of stocks: NYSE: 2900, AMEX:837, NASDAQ: 3000

-h

[AirJordan]

Originally Posted by lswswein

Stats say that it is more difficult to pick fund than stocks.

Total # of mutual funds: 8905
Total # of stocks: NYSE: 2900, AMEX:837, NASDAQ: 3000

-h

Woooow, such a compelling argument, and so well thought out. If you think picking funds is harder than stocks, then you're out of your mind

[lswswein]

Originally Posted by AirJordan

Woooow, such a compelling argument, and so well thought out. If you think picking funds is harder than stocks, then you're out of your mind

Well you did disprove it it with an even better argument didn't you!
You know where I stand on the topic

-h

[Alex]

Originally Posted by AirJordan

10k DODFX (Dodge and Cox)
8k RYVPX (Royce Value Plus)
5k FAIRX (Fairholme)
5k JSVAX (Janus Contrarian)
5k FBRVX (FBR Small Cap)
5k ARTKX (Artisan Small Cap)
10k VPCCX (Primecap Core)
10k PREOX (Perrit Emerging Ops.)

Beating Indexes is EZ

Also, I really don't like to trade, I'm more of a buy and hold type. I don't believe that panicing got anyone anywhere, and timing the market is too hard. If I wanted to trade I'd play with equities, but the consensus of the board is I'm not that smart...

That's funny, you just said you traded in and out of VFINX, so what's the truth?

[AirJordan]

Originally Posted by Alex

That's funny, you just said you traded in and out of VFINX, so what's the truth?

Sorry sarcasm is a bit hard to portray over the internets

[unclemick]

AJ - have no idea whether you have a dryer sense of humor than mine and are playing the perfect foil. Let's hope we don't convince you too soon - and miss the opportunity to put up our experience and the results of recent academic research for those interested to peruse.

So at least you recognize chasing the 'value premium' or at least contrarian(dare I say RTM), low turnover, low expense ratio puts the odds more on your side.

heh heh heh - even if the odds are agin ya - there are enough winners every generation to keep the game afoot. Of course if all you want to do is retire after persuing a career/family etc - pssst Target Retirement - dollar cost average, use all tax favorable vehicles availible(401k, IRA, Roth,etc.) and when the time comes -Retire. With the new lifecycle funds - it's stone simple - of course most can't resist putzing - it's incurable and hormonal - but you could possibly work it off with a kayak - or a few individual stocks.

Or poker - lest I forget!

[yakers]

Originally Posted by unclemick2

heh heh heh - even if the odds are agin ya - there are enough winners every generation to keep the game afoot. Of course if all you want to do is retire after persuing a career/family etc - pssst Target Retirement - dollar cost average, use all tax favorable vehicles availible(401k, IRA, Roth,etc.) and when the time comes -Retire.


but you could possibly work it off with a kayak - or a few individual stocks.

Damn, unclemick just released my secret retirement plan Just about everybody seems to miss the kayak part....

[HFWR]

Originally Posted by AirJordan

10k DODFX (Dodge and Cox)
8k RYVPX (Royce Value Plus)
5k FAIRX (Fairholme)
5k JSVAX (Janus Contrarian)
5k FBRVX (FBR Small Cap)
5k ARTKX (Artisan Small Cap)
10k VPCCX (Primecap Core)
10k PREOX (Perrit Emerging Ops.)

Beating Indexes is EZ

Also, I really don't like to trade, I'm more of a buy and hold type. I don't believe that panicing got anyone anywhere, and timing the market is too hard. If I wanted to trade I'd play with equities, but the consensus of the board is I'm not that smart...

Returns? Expenses?