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Index funds - The ultimate wisdom ???

An SI Board Since May 1997

Posts	SubjectMarks	Bans
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Emcee: Oliver Ruppert	Type: Unmoderated

Introduction Compact

Index Funds, the ultimate wisdom ?????

I would like to start a thread on index funds. Anyone is welcome, please vocate your opinions ! I'm especially interested in any critics about index funds.
The general theme usually is: Since index funds outperform 70% of the actively managed funds, why bother investing money in these actively managed funds ?

To start, here some arguments which would contest the leadership of index funds:

1) The success of indexing is a self-fulfilling prophecy.
Some market observers believe that indexing's extraordinary returns are a self-fulfilling prophecy. Large S&P 500 Index funds, they say, are driving up the prices of the stocks contained in the Index, thus contributing to the benchmark's stunning performance relative to active funds. The sudden surge of cash into S&P 500 Index funds, combined with the recent performance of these funds, would seem to prove this theory correct.(taken out of VanGuard's, the king of indexing, website)

2)Since most index funds are invested fully all the time, there performance should implicitly be higher compared to other funds, which are usually invested only up to 95%. (which implies of course that index funds should underperform the market in bear markets)

Other questions, I'd like to hear other peolpe's view on:

What percentage of total market capitalisation can index funds take up?
How much will index funds inflate artificially stock prices due to 'blind' nature of investing?
Are the new 'nifty fifty' stocks a mere offspring of the index funds?
How much can the recent out-performance of the S&P500 be contributed to fund inflows into index funds mirroring exactly this fund ?
Why does the king of indexing recently pulled its advertising for its index related products?
How do the relative performances compare in bear vs bull markets ?
Do active fund managers have an advantage in bear markets ?

I hope there is some interest in it. What are your views ??

Regards
oliver

Go to reply# or date (mm/dd/yy):

Reply	Message Preview	From	Recs	Posted
21	Dear Reader, It is my belief that there is a passive investing bubble. I am sti	Harshu Vyas	-	5/3/2021
20	Indexing, EMH/MPT, mutual funds, etc.: > Porc, > My favorite qu	porcupine --''''>	-	11/8/1997
19	to all ! I am trying to find an index fund mirrowing the Russel 2000 ? any ti	Paul Jansen	-	9/24/1997
18	Could you elaborate on you algorythm ? Your model does not say when to take pr	Oliver Ruppert	-	7/20/1997
17	One place to beat the S&P 500 members.aol.com	Jingsheng Sun	-	7/19/1997
16	I doubt. The Dow Jones is not a very good index to mirror. It's too small a	Oliver Ruppert	-	6/30/1997
15	I frequently hear discussions about S&P 500 Index Funds and their merits.	Trip	-	6/30/1997
14	I think index funds are a great idea for conversation. Especially since many in	DavidD	-	6/13/1997
13	thanks mark that's what i needed.	Roland Kahn	-	6/10/1997
12	Andrew Tobias discusses SPY in his column in Worth: worth.com The expense rat	SredS	-	6/10/1997
11	I am trying to find info on SPY but i can't seem to find it anywhere. I wan	Roland Kahn	-	6/9/1997
10	<<With shorts and longs that's tying up a lot of money to make it on	Oliver Ruppert	-	5/16/1997
9	With shorts and longs that's tying up a lot of money to make it on the narr	capitalistbeatnik	-	5/15/1997
8	Hi folks, thanks for two interesting links. I thought as well in the last few	Oliver Ruppert	-	5/15/1997
7	Malkiel, the Buddha of index-fund academics, suggests small cap and foreign ind	capitalistbeatnik	-	5/15/1997
6	Given the ratio of the Russell to the Dow it would seem to be the WORST time to	capitalistbeatnik	-	5/15/1997
5	True - if we knew how long we would have to giveup growth by not being in the b	Gene Klein	-	5/14/1997
4	I wonder if it would be possible to test the following theory on a computer mod	capitalistbeatnik	-	5/14/1997
3	Oliver - I know I am straying from your subject of S&P indexing which I am	Gene Klein	-	5/13/1997
2	Oliver - Here is the source for advance S&P stock picks - stockinfo.standar	Gene Klein	-	5/13/1997
1	Oliver: good thread - good luck - hope you accept questions too. 1. is there a	Gene Klein	-	5/13/1997

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