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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: At_The_Ask who wrote (46666)	8/15/2003 7:41:53 PM
From: James F. Hopkins	Read Replies (1) \| Respond to of 52237

I'll add an after thought or two.. By Robert Brokamp It's no secret that investors in stock mutual funds would be better off with an index fund -- essentially investing in the whole stock market rather than banking on a fund manger's ability to beat it (which, statistically, he isn't likely to do). ---- I'll agree, mostly because I've know this for years.. --- --- BUT Index Funds Complicate the Markets Wall Street loves index funds. They are now the largest of mutual funds. They are sold as less volatile instruments than single stocks, and investors have flocked to them. Often even Mutual funds use spiders and QQQ's and other exchange traded index funds to match the market. Longboat Global Advisors recently commented that an unintended consequence of the growth of index funds is "We believe that indexing via market capitalization is destroying whatever remains of pricing efficiency in the American market and is a primary reason for the bear's grip and the concurrent expansion of volatility, very simply put, every time a market cap index is bought, the fattest stocks receive sponsorship by the sole criteria of their inclusion in the index... regardless of the actual prospects or value of the company. Mr. Jean Claude Trichet, Governor of the Banque de France, in a presentation at the Federal Reserve Bank of Chicago, gave indexing as one of four reasons that markets appear less efficient. He stated that index management helps "to amplify market trends, buying more as the market rises and liquidating more as the market drops. It can be argued that index funds distort the market and that, as a result, the indices end up creating rather than measuring performance." ----- I said it long before Mr Jean Tricher.. Buying the QQQ supports the price of large NASDAQ stocks even as the prospects for profits of the individual companies decline. There's no solution, as we can't ban index funds. But it does affect the market. ----- Sure they spread risk, but in the long run they hurt the market.. as good stocks pay the price for the clappers, and it also makes stock picking an effort not worth the time it takes.. We are saddled with index funds .a form of communal sharing of risk.. it can take years for a super large cap rat dog no good piece of crap shit to lose enough market cap to let a really good company gain enough ground to make a meaningful change in the basic economics.. In other words Index funds are destroying what the market was intended to do..index funds are a form of communism that the capitalist invented.. I doubt they will go away or that any one now has the power to limit their power.. ---- Weighted index funds do the most damage.. but if you can't beat them..and your going to play the market..Join them ! Jim