ladelfina
Thinks s/he gets paid by the post
- Joined
- Oct 18, 2005
- Messages
- 2,713
Thanks ...Yrs to Go for the instruction on hedge funds.
I love ((^+^)) SG's metaphor about everyone in MN using your toilet!
I was thinking some more about this and I can't see how the fears of Apocalypse aren't already somewhat founded. to wit: individual investors are constantly throwing more money into big-name, big-cap companies just because they are exactly that.. On the financial channels, who do the talking heads talk about? Exxon, or Aegean Marine Petroleum (just to pick a name out of a hat)? Wasn't there an adage about nobody getting fired for recommending IBM?
There are thousands of more potentially 'worthwhile' (remunerative) investments that will never cross the radar screen of the average investor. One could argue that indexing actually helps to redistribute investment money back in 'favor' of firms that few folks have heard of and that analysts don't follow. Following the index route, I put money into the Russell 2000 that I never would have dared to on an individual company basis.. for me it would have been like thowing a dart at a dart board.
The case of lemming-like behavior dampening the market via indexing could already be made WRT the S&P 500, no? Does anyone think we are seeing ill effects from that?
Apocalypse, what about 'indexing' that underweights the S&P 500? Is there any reason you think that would be 'bad'?
I'm still a neophyte at this, but to me the core of indexing is that it leaves one free to makes one focus on asset allocation. Just like there's not ONE stock portfolio that will work for everyone, neither is there ONE asset allocation plan that will work for everyone. But, in general, if you are reasonably represented in all segments of the market you will do better than if you are not. Come "the Apocalypse", if ALL segments of the market do badly, well, we're all going to be in rough shape, no doubt about it. But if an index investor with a good asset allocation ends up even 1% ahead of the rest, well, then he's still better off than the next guy.
Kind of garbled thoughts (haven't yet finished my coffee...).
I love ((^+^)) SG's metaphor about everyone in MN using your toilet!
I was thinking some more about this and I can't see how the fears of Apocalypse aren't already somewhat founded. to wit: individual investors are constantly throwing more money into big-name, big-cap companies just because they are exactly that.. On the financial channels, who do the talking heads talk about? Exxon, or Aegean Marine Petroleum (just to pick a name out of a hat)? Wasn't there an adage about nobody getting fired for recommending IBM?
There are thousands of more potentially 'worthwhile' (remunerative) investments that will never cross the radar screen of the average investor. One could argue that indexing actually helps to redistribute investment money back in 'favor' of firms that few folks have heard of and that analysts don't follow. Following the index route, I put money into the Russell 2000 that I never would have dared to on an individual company basis.. for me it would have been like thowing a dart at a dart board.
The case of lemming-like behavior dampening the market via indexing could already be made WRT the S&P 500, no? Does anyone think we are seeing ill effects from that?
Apocalypse, what about 'indexing' that underweights the S&P 500? Is there any reason you think that would be 'bad'?
I'm still a neophyte at this, but to me the core of indexing is that it leaves one free to makes one focus on asset allocation. Just like there's not ONE stock portfolio that will work for everyone, neither is there ONE asset allocation plan that will work for everyone. But, in general, if you are reasonably represented in all segments of the market you will do better than if you are not. Come "the Apocalypse", if ALL segments of the market do badly, well, we're all going to be in rough shape, no doubt about it. But if an index investor with a good asset allocation ends up even 1% ahead of the rest, well, then he's still better off than the next guy.
Kind of garbled thoughts (haven't yet finished my coffee...).