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…

Replies to this Post

  1. Rob C says:

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

  2. Rylee B says:

    There still a worthy investment strategy.

  3. Anson R says:

    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 says:

    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 says:

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

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