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Index funds are already diversified. When you invest in one, you are betting that the entire economy or a sector of the economy, depending on the index fund, wi
by rpedela 9y ago
Index funds are already diversified. When you invest in one, you are betting that the entire economy or a sector of the economy, depending on the index fund, will increase in value.
- walshemj 9y agoYes but take Enron for example or any other value trap an index fund must buy those. And the Massive buying of indexes bids up the price of shares like FANG's beyond the shares real value.
- rpedela 9y agoOn average, one company in the portfolio going bankrupt isn't going to make much of a difference assuming the portfolio is large enough. Most index funds have a large enough portfolio.