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The S&P 500 has yielded like a 9% return for almost 65 years - since your grandpappy was knee-high to a grasshopper. The nice thing about index funds is they tr

The S&P 500 has yielded like a 9% return for almost 65 years - since your grandpappy was knee-high to a grasshopper. The nice thing about index funds is they track indices that are curated. Only the 500 best companies (according to a metric) are included and the companies are rotated in and out as that changes. It's not really a cult, what matters is your time horizon.

rightbyte 4y ago
> Only the 500 best companies (according to a metric) are included and the companies are rotated in and out as that changes. That is the thing. What would the return have been if my grandpappy bought SAP500 65 years ago and kept those stocks he bought at the time until today? I have never seem such a number. I mean if the loser stocks are rotated out it is hard to keep up with the index due to losses and transaction costs.
- chowchowchow 4y ago
  You are correct. Grandpappy’s portfolio would have lots of defunct businesses and no Apple, Google, or Microsoft, to name a few.
- mister_tee 4y ago
  a bit out of date, missing at least one global financial crisis, but there's a 2004 paper looking at the returns of holding the original S&P500 companies from its start 65 years ago, with some alternative portfolios too. Some of the particular decisions in the setup may or may not agree with grandpappy, I only skimmed, but it looks like the "survivor's portfolio" has returns in line with S&P500-with-replacement and even outperformed the newcomers slightly. 19 of the largest 20 companies were still around in some form when including mergers and acquisitions... however again this is 2004, and at least Kodak and Sears went out of business since then, IIRC? https://rodneywhitecenter.wharton.upenn.edu/wp-content/uploads/2014/04/0429.pdf https://rodneywhitecenter.wharton.upenn.edu/wp-content/uploa...
  - arcticbull 4y ago
    Far stranger than going out of business, KODK became a meme stonk when Trump announced they were going to manufacture hydroxychloroquine causing it to 10X overnight back in early 2020. [1] [1] https://www.voanews.com/a/economy-business_trump-administration-promises-huge-loan-kodak-develop-drug-ingredients/6193592.html https://www.voanews.com/a/economy-business_trump-administrat...
vasco 4y ago
Telling me more about the songs of the cult won't make me more likely to join, most of all because I've already joined. That doesn't mean it isn't a cult and that Burry doesn't have a great point when he says that there's trillions of dollars indexing stocks that have very little liquidity in comparison.
- hotpotamus 4y ago
  I think once the cult includes the majority of the population and GDP of a country, we just call it society.
  - alasdair_ 4y ago
    It’s still reasonable for someone in Utah to consider the Mormon church a cult, despite meeting your criteria.

rightbyte 4y ago

> Only the 500 best companies (according to a metric) are included and the companies are rotated in and out as that changes. That is the thing. What would the return have been if my grandpappy bought SAP500 65 years ago and kept those stocks he bought at the time until today? I have never seem such a number. I mean if the loser stocks are rotated out it is hard to keep up with the index due to losses and transaction costs.

chowchowchow 4y ago
You are correct. Grandpappy’s portfolio would have lots of defunct businesses and no Apple, Google, or Microsoft, to name a few.
mister_tee 4y ago
a bit out of date, missing at least one global financial crisis, but there's a 2004 paper looking at the returns of holding the original S&P500 companies from its start 65 years ago, with some alternative portfolios too. Some of the particular decisions in the setup may or may not agree with grandpappy, I only skimmed, but it looks like the "survivor's portfolio" has returns in line with S&P500-with-replacement and even outperformed the newcomers slightly. 19 of the largest 20 companies were still around in some form when including mergers and acquisitions... however again this is 2004, and at least Kodak and Sears went out of business since then, IIRC? https://rodneywhitecenter.wharton.upenn.edu/wp-content/uploads/2014/04/0429.pdf https://rodneywhitecenter.wharton.upenn.edu/wp-content/uploa...
- arcticbull 4y ago
  Far stranger than going out of business, KODK became a meme stonk when Trump announced they were going to manufacture hydroxychloroquine causing it to 10X overnight back in early 2020. [1] [1] https://www.voanews.com/a/economy-business_trump-administration-promises-huge-loan-kodak-develop-drug-ingredients/6193592.html https://www.voanews.com/a/economy-business_trump-administrat...

vasco 4y ago

Telling me more about the songs of the cult won't make me more likely to join, most of all because I've already joined. That doesn't mean it isn't a cult and that Burry doesn't have a great point when he says that there's trillions of dollars indexing stocks that have very little liquidity in comparison.

hotpotamus 4y ago
I think once the cult includes the majority of the population and GDP of a country, we just call it society.
- alasdair_ 4y ago
  It’s still reasonable for someone in Utah to consider the Mormon church a cult, despite meeting your criteria.