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0 pointsjiscariot7y ago0 comments

I am not a financial guy, but do have concerns with indexing, given that these days it seems that we've reached "shoeshine boy"[1] levels of "just put all your money in Vanguard's VOO" sentiment--more of an inner contrarian thing than anything concrete.

It is difficult to argue with the diversification of the ETFs and I by no means avoid them, but given that most are market-cap weighted, they skew toward large stocks and self-perpetuate the growth of a handful of large cap stocks. So every $ invested in VOO, has 4.2% in APPL. I'm not sure what impact that would have other than perhaps making these large caps more volatile during a market readjustment or collapse. I also, am not sure there is a better alternative as you probably wouldn't want equal weighting between #1 and #500 on an S&P index fund.

Not a financial guy so am interested in peoples thoughts on this.

[1] http://archive.fortune.com/magazines/fortune/fortune_archive...

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deanmoriarty7y ago

The true test will come at the next downturn, my speculation is that most of the people who buy index funds because the "shoeshine boy" told them, will panic and sell, realizing significant losses. Shortly after, more active traders will come in and reap the rewards by buying at the bottom (e.g. like Buffett did in 2009).

I believe if you continue holding (I will) you'll do fine if we don't face a catastrophe, but you certainly need to have some sort of financial discipline to see your net worth slashed by 30%+ and stay still.

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0 pointsjiscariot7y ago0 comments

Not a financial guy so am interested in peoples thoughts on this.

[1] http://archive.fortune.com/magazines/fortune/fortune_archive...

0 comments

deanmoriarty7y ago

j / k navigate · click thread line to collapse