Comment on Open Thread, September 30 - October 6, 2013

Mon, 30 Sep 2013 23:06:51 GMT

The issue with an index fund that based on something like the SAP 500 is that the SAP 500 changes over time.

If a company loses their SAP 500 all the index funds that are based on the SAP 500 dump their stocks on the market. On average that's not going to be a good trade. The same goes for the trade of buying the companies that just made it into the SAP 500. On average you are going to lose some money to hedge funds or investment banks who take the other side on those trades.

In general you can expect that if you invest money into the stockmarket big powerful banks have some way to screw you. But they won't take all your money and index funds are still a good choice if you don't want to invest too much time thinking about investing.

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