Index Investing Becoming a Victim of Its Own Success

Too much of a good thing can end up being bad. That includes using a benchmark index as the basis for an investing apparently.

In the July 2010 paper (download here from SSRN; acknowledgement to Stingy Investor where I found the link) On the Economic Costs of Index-Linked Investing, NYU prof and NBER research associate Jeffrey Wurgler reviews some research results that are disquieting for investors who follow a passive index strategy based on popular indices such as the S&P 500.

Wurgler says: “… the increasing popularity of index-linked investing may well be reducing its ability to deliver its advertised benefits …” The problems:  Read More…

This article has 5 Comments

  1. Rob C

    Gold is a good move, but silver is going to explode and it’s only at about $22 an ounce.

  2. Rylee B

    There still a worthy investment strategy.

  3. Anson R

    Its the damn load fees that keep rising on these funds. They are index funds so why the rising fees is beyond me.

  4. Maneet Bott

    Yes, move your money into gold like Glenn Beck tells you to. Don’t be silly. This isn’t america, dont get scared by the slightest tremour.

  5. Gregg Bisby

    This is why i’ve moved my money into gold.

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