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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Investor2 who wrote (13726)	2/2/1998 9:19:00 AM
From: edward miller	Read Replies (1) \| Respond to of 18056

I am specifically saying that past performance is no guarantee of future results. There is always the danger of these index funds driving a phenomenon similar to the "Nifty Fifty" stocks of the 1960's. When everyone was in those stocks (and decided to get out), then everyone realized they had a problem. Can't say when, but it will happen again. Don't be fooled by the last 10 years. Markets are dynamic. Now, let's also specifically talk about a bear market. At some future point we will be in a bear market (I will pass on whether the future is now for this post). My point about index funds is that they are fully invested in the index stocks. If the index crashes your money crashes and the only way out is to sell the fund. Of course you can do that. Another equity fund has the option to get out and pick new stocks. Most people on SI know that index funds are outperforming the managed funds. That doesn't mean you are always going to be safer in them.