3 ms·
Let's say Wertz Car Rental IPOs tomorrow. Why would you go out of your way to buy something you know nothing about, instead of just ignoring it? Answer: becaus
by gowld 6y ago
Let's say Wertz Car Rental IPOs tomorrow. Why would you go out of your way to buy something you know nothing about, instead of just ignoring it?
Answer: because you bought a broad market index and didn't expect the standards to retroactively drop and let it get stuffed with junk. This is how the economic crash of 2008 happened.
- perl4ever 6y agoI think you're changing the subject? A broad market index fund is not realistically affected by Hertz at this point, because the market cap is minute and the index fund simply holds all (most) stocks in proportion. The index fund inherently doesn't buy more stock just because it's cheap, if it's cap weighted. So, while I'm not sure exactly what you are saying, I've seen other comments where people are upset at their index funds being somehow disturbed and it seems like nonsense to me. I guess this episode raises some questions about equal weighted index funds, but those are relatively rare. Not to mention, I would think that even total market funds sell bankrupt companies. You have to have some standards. But in any case, worrying about what Hertz does to your total market fund seems like worrying about what a bug on your windshield does to your gas mileage.