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Index Funds
Passive funds have become the cornerstone of modern investment portfolios, praised for their low costs and market-wide exposure. But is there more to the story than meets the eye? Could it be that these funds, while seemingly beneficial, are facilitating practices that ultimately disadvantage the very investors they aim to serve?
In a world where the allure of wealth and the stock market was an enduring passion, two young boys embarked on journeys that would forever alter the landscape of financial history. Their stories unfold in different eras and places, but they are inextricably linked by a single, enigmatic entity – an unassailable index.
What is Indexing?
Stock market indexing is a passive investment strategy that aims to replicate the performance of a specific group of stocks or the overall market. It involves creating a portfolio that closely mirrors the composition and weightings of a particular stock market index, such as the S&P 500 or the Dow Jones Industrial Average. By investing in this diversified basket of stocks, investors can achieve broad market exposure and potentially benefit from overall market growth without attempting to pick individual stocks. This strategy is popular due to its simplicity, low costs, and historical long-term returns.
Standing against the establishment, having a voice and speaking up needs courage. This is what you did. You spoke up against the industry which started the first Mutual Fund in 1775. Bloomberg calls it a revolution, you call it a revolution, Wall Street Journal is calling it differently, but that does not matter. Mutual Funds are in a descent. Stock Pickers might still continue to follow Graham and Dodd approach, but the facts are overwhelming. If an institution can’t beat the index then it is wasting resources.
