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The idea of an index fund is you're invested in the market as a whole, not a selection of a small number of stocks. So a good index fund will crash when the mar
by mcintyre1994 9y ago
The idea of an index fund is you're invested in the market as a whole, not a selection of a small number of stocks. So a good index fund will crash when the market as a whole crashes, and recover in line with the market. The entire point is you avoid tying your performance to any selection of say 10 stocks, and typically an index fund will outperform most professional stock pickers.
- RhysU 9y agoI like to think that it's being long on Capitalism.
- lr4444lr 9y agoThat's exactly what it is, if not going long on human society itself. So far I've found, without fail, that everyone with a strong distrust of the stock market as something "rigged" or a belief that it's somehow an "expendable" part of investing that doesn't affect them has an objectively very poor to non-existent understanding of even basic facts of economic and business activity. Much poorer than I do, at any rate, and I don't really know that much.
- walshemj 9y agoIn the USA probably Folk memories of the 29's crash are still having an effect
- makomk 9y agoThat makes me wonder; how on earth would you take a short position on Capitalism anyway?
- dooglius 9y agoYou could borrow money to build a secret bunker full of non-perishable food
- pbhjpbhj 9y agoThat's what everyone who makes a fortune on the markets does, they extract value from the system to create personal wealth. The individuals desire is to do just that; that's how the system "works".
- mateo411 9y agoSell stocks. Buy shotgun shells and canned goods.
- pbhjpbhj 9y agoFunnily enough I was explaining that to someone else this morning ... But, you're not invested in the whole market. I'd find it instructive to know the answers. I can't imagine no indexed stock has ever failed, nor that the indexes are a perfect insulation - you wouldn't need FTSE250 if the 100 was perfect, they do moderately different things. Indexes are picked by "stock pickers" they're just picking conservative long, wide spreads AFAIK.
- Chickenality 9y agoA lot of indices are something like "Top [N] stocks weighted by market cap in [industry/region/country]". You could call those stocks 'picked', but it's not as though someone is doing some deep analysis of the companies' fundamentals or trading history in order to decide which stocks make it into the index. I think that type of analysis is the kind of thing most people think of when they hear about 'stock picking'. Yes, no index is perfect. But most of them provide more diversification than the average person would be able to achieve by manually managing a portfolio.