By: Miss M

Miss M — Tue, 03 Feb 2009 03:31:47 +0000

I’ll start off by saying I’m not an expert and my losses over the last year would tell you so. In that light, I think Bogle is being rational. In index fund investing all stocks are treated equally, held in some ratio that represents the index you are tracking. If you know Company A is making some bad decisions and is in a poor position for the current market, why would you hold its stock? In index investing you would hold Company A regardless of whether it’s a good bet or a bad bet. In a rising market it doesn’t matter that much, everyone is making money. A rising tide lifts all ships…In a falling market it pays to be more strategic. Dump the losers, there are definitely some companies that were a bad idea to stick with. A decent actively managed fund better be able to out-maneuver an index fund in a falling market.

Comments on: What We Learn Inside the Portfolio of the Index Fund King: Jack Bogle

By: Miss M