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As opposed to all the recessions/crises before indexing where stocks didn't go down? Sharp people will scoop up great names at a discount just like always.
by jonknee 7y ago
As opposed to all the recessions/crises before indexing where stocks didn't go down? Sharp people will scoop up great names at a discount just like always.
- conanbatt 7y agoIts not the same: someone unwinding broad positions could sell anti-cyclical stocks that did not fall too hard and keep the ones lowest. Someone with index funds has no choice: has to dump the good and the bad.
- jonknee 7y agoSure, which also happens every time there's a big down move in the market. Actually per prospect theory it is often the best performers that get sold first: https://en.wikipedia.org/wiki/Disposition_effect https://en.wikipedia.org/wiki/Disposition_effect Regardless, my point is smart stock pickers will come in and bid up companies that get oversold. No damage done unless you tried to time the market in your IRA and sold at the bottom. People who continue automatic purchases of broad indexes will be happy (at some point!) for the discount.
- ummonk 7y agoThere are plenty of value stock ETFs out there. You don't have to go with an index fund.
- conanbatt 7y agoNobody has to, but too many have, thats the whole point.
- thekyle 7y agoValue stock ETFs are index funds.
- ummonk 7y agoMany are index funds, but some are directly curated by the fund creator without mirroring any pre-existing index. Though they still function similarly to index funds in that they have low expense ratios, unlike traditional actively managed mutual funds with their exorbitant management fees.
- smileysteve 7y ago> Someone with index funds has no choice: has to dump the good and the bad. But they can be rebalancing instead of going to cash as well; Such as moving from SPY (S&P 500) to SPYD (S&P 500 dividend stocks)