What are the arguments against index investing?

[comagnum]

What are the arguments against index investing?

Nothing wrong with investing in stock indexes as long as you don't put all your $ in at one time, better to carefully layer in over time or via averaging in each pay period through a work plan.

You may want to learn how to trade around a core position.

 

[Truth_]

25 stocks ....$10k per stock..$250k

250M = 250k .... apology for using an antiquated format from the banking industry

 

[murray t turtle]

What are the arguments against index investing?

Nothing wrong with investing in stock indexes as long as you don't put all your $ in at one time, better to carefully layer in over time or via averaging in each pay period through a work plan.

You may want to learn how to trade around a core position.

%%
I like Jim Cramer even if this never happened- ''BAC is going to $60 in a heart beat ''LOL Overall a good video, market UP trends/bull markets most of the time. DO not try that in a bear market; even though more than a few strong stocks go up ,in a downTrending bear markets.
I remember his Cramer Hedge Fund recommendation on cover of IBD book ''24 Lessons.....''

 

[yiehom]

S Klarman, margin of safety:

Indexing is a dangerously flawed strategy for several reasons. First, it becomes selfdefeating
when more and more investors adopt it. Although indexing is predicated on efficient
markets, the higher the percentage of all investors who index, the more inefficient the markets
become as fewer and fewer investors would be performing research and fundamental analysis.
Indeed, at the extreme, if everyone practiced indexing, stock prices would never change relative
to each other because no one would be left to move them.

 

[luisHK]

at anyrate, once you get your index thing down, it becomes a matter of asset allocation, so out of the fire into the frying pan.

That sounds very much true, some good discussions on this forum btw on asset allocation.

 

[luisHK]

choose the wrong index at the wrong time and you are fucked...see nikkei 225 chart for an example

Indeed, that s why asset allocation gets time consuming, while still not guaranteeing profits.

 

[luisHK]

The scientist does this with a tool called mathematics.

Here's an example. You buy a stock on Monday for $10. Tuesday morning you sell it for $11, making a 10% profit per market day. If you hold it till next Monday, it would have to rise to over $16.10 to maintain your first days compounded rate of gain. If you hold it a month, say 22 market days, it would have to rise to over $81.40 to maintain your first day rate. The longer you hold it, the lower the probability that you will be able to match that first days rate. This tells you immediately that LONG TERM BUY AND HOLD IS SILLY.

Top level scientists we get at ET. Did you work at MIT ? as temp assistant janitor ?
What are the odds of finding another stock on the second day that would offer similar returns ? Than reproduce your monday gains 22 days in a row ?
By your same logic, this should tell you immediatly that active trading is silly.

That was conclusive, you should stop beeing so modest and award yourself a Fields medal.

 

[Arnie]

I advise all of my young friends and family to invest the bulk of their money by dollar cost averaging into a blue chip index.
Over the long term indexes will move up. Unlike a stock, they can't go to zero. They are constantly replacing the laggards with new co's.
Very few have what it takes to invest in individual stocks and beat the market, much less match it.

 

[qxr1011]

What are the arguments against index investing?

one should not confuse parking money with investing

most people do not invest they just park money

some of them park money in index...

investing on the other side is speculation on value

one has to have a method of constantly assessing the value in order to find the undervalued instrument , invest in it and constantly asses its valuation, and then to sell it when the valuation picked or when the expectations of the valuation's growth are no longer valid

if investing in index is done with the working method at hand then nothing wrong with it, otherwise its just park and pray type of game for looser and suckers

 

[theapprentice]

stick with the indexes. At least you always know where the index is heading. Same can't be said for stocks