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Lumifer comments on Open thread, Oct. 20 - Oct. 26, 2014 - Less Wrong Discussion
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What makes you think that investing in what is typically large-cap US equity is "playing it safe"?
There are index funds that also include smaller-cap equity, non-US equity, and bonds. And even a large-cap US equity index fund is probably better than gambling except for the small minority of people who know what they're doing.
Of course, but LW rarely gets into specifics of which index funds other than prefer low-cost ones.
Heh. Do you think there might be a fallacy involved in this argument?
Sure, it's not like these are mutually exhaustive. Then again, hiding cash under your mattress probably isn't better than index funds either.
My point is not that investments betters than index funds can't exist, it's that it's hard for most people to know what they will be ahead of time.
An "index fund" is not an investment. It's a large class of very diverse investments with different characteristics.
Reading charitably, the advice the invest in an index fund really says "your investment portfolio should be diversified". That is generally true, but woefully inadequate as a sole guideline to figure out where to put your money.