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To be clear, the Warren Buffet bet was about index funds. Not all ETFs track index funds, and even the ones that do aren't necessary. You can just buy into the

To be clear, the Warren Buffet bet was about index funds. Not all ETFs track index funds, and even the ones that do aren't necessary. You can just buy into the funds directly.

Amorymeltzer 11y ago
Indeed, although Buffet did bet on an ETF, which was the index fund SPY.
xyzzy4 11y ago
You can make even more money in the long run if you use leverage to bet on the S&P 500. If you don't believe me, do the math out.
- scottlocklin 11y ago
  I guess this is tautologically correct, but if you did a 2x levered punt on SPX in 2007, you'd have gone broke.
  - xyzzy4 11y ago
    That's not true if you sell stock to maintain a certain equity to debt ratio. If you use leverage in the S&P 500 then you have much a faster growth rate, so in the long term it's still better.
- worik 11y ago
  Clearly you cannot do math. It all depends on market timing, and if you get that wrong you will go broke as quick as your leverage. If you can get that right, well you would not be posting here, you would own here....
- jegutman 11y ago
  There's a funny story I read a while back about this play. If you did this for long enough eventually you'd be the biggest company in the S&P 500 (technically maybe not, but in practice very much so!).
anonymousDan 11y ago
Can you clarify the difference between an index fund and an etf? I always thought they were synonymous.
- dne 11y ago
  ETF = investment fund traded on a stock exchange. Index fund = investment fund (mutual fund or ETF) that tracks an index, i.e. passively managed.
  - MagicWishMonkey 11y ago
    So is something like VSGAX an ETF or is it an index fund?
    - dne 11y ago
      It's an index mutual fund[1] that is also available as an ETF[2]. 1: https://personal.vanguard.com/us/funds/snapshot?FundId=5861&FundIntExt=INT https://personal.vanguard.com/us/funds/snapshot?FundId=5861&... 2: https://personal.vanguard.com/us/funds/snapshot?FundId=0938&FundIntExt=INT https://personal.vanguard.com/us/funds/snapshot?FundId=0938&...
    - elbows 11y ago
      If I understand correctly, ETF and index fund are orthogonal terms. An ETF is traded on the stock market -- in contrast to a mutual fund which you have to buy through other channels. An index fund tracks an index rather than being actively managed. I don't know about VSGAX specifically, but it could be both an ETF and an index fund.
    - tonfa 11y ago
      Index fund, it isn't trading in an exchange.
- karmapolice 11y ago
  ETFs are just investment funds you can buy and sell in the stock market, with their own symbol and everything just like any other stocks. Index (passive) funds track an index, instead of trying to outperform the market. You can have passive funds that are not ETFs (do not appear as a symbol in the stock market, have to go through a bank or whatever to buy shares), and active funds that are ETFs (actively managed).

To be clear, the Warren Buffet bet was about index funds. Not all ETFs track index funds, and even the ones that do aren't necessary. You can just buy into the funds directly.

Amorymeltzer 11y ago

Indeed, although Buffet did bet on an ETF, which was the index fund SPY.

xyzzy4 11y ago

You can make even more money in the long run if you use leverage to bet on the S&P 500. If you don't believe me, do the math out.

scottlocklin 11y ago
I guess this is tautologically correct, but if you did a 2x levered punt on SPX in 2007, you'd have gone broke.
- xyzzy4 11y ago
  That's not true if you sell stock to maintain a certain equity to debt ratio. If you use leverage in the S&P 500 then you have much a faster growth rate, so in the long term it's still better.
worik 11y ago
Clearly you cannot do math. It all depends on market timing, and if you get that wrong you will go broke as quick as your leverage. If you can get that right, well you would not be posting here, you would own here....
jegutman 11y ago
There's a funny story I read a while back about this play. If you did this for long enough eventually you'd be the biggest company in the S&P 500 (technically maybe not, but in practice very much so!).

anonymousDan 11y ago

Can you clarify the difference between an index fund and an etf? I always thought they were synonymous.

dne 11y ago
ETF = investment fund traded on a stock exchange. Index fund = investment fund (mutual fund or ETF) that tracks an index, i.e. passively managed.
- MagicWishMonkey 11y ago
  So is something like VSGAX an ETF or is it an index fund?
  - dne 11y ago
    It's an index mutual fund[1] that is also available as an ETF[2]. 1: https://personal.vanguard.com/us/funds/snapshot?FundId=5861&FundIntExt=INT https://personal.vanguard.com/us/funds/snapshot?FundId=5861&... 2: https://personal.vanguard.com/us/funds/snapshot?FundId=0938&FundIntExt=INT https://personal.vanguard.com/us/funds/snapshot?FundId=0938&...
  - elbows 11y ago
    If I understand correctly, ETF and index fund are orthogonal terms. An ETF is traded on the stock market -- in contrast to a mutual fund which you have to buy through other channels. An index fund tracks an index rather than being actively managed. I don't know about VSGAX specifically, but it could be both an ETF and an index fund.
  - tonfa 11y ago
    Index fund, it isn't trading in an exchange.
karmapolice 11y ago
ETFs are just investment funds you can buy and sell in the stock market, with their own symbol and everything just like any other stocks. Index (passive) funds track an index, instead of trying to outperform the market. You can have passive funds that are not ETFs (do not appear as a symbol in the stock market, have to go through a bank or whatever to buy shares), and active funds that are ETFs (actively managed).