Don’t Ask a Banker for Stock Tips

Q. Does anyone make anything that beats a low-fee index fund?

There are at least two short answers to this, which are:

1. Don’t ask me, and

2. No.

So this has started auspiciously.

Billfold pal Matt Levine’s new “Ask A Banker” column is up at Planet Money. It’s about investing in the stock market and is very, very good.

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5 Comments / Post A Comment

deepomega (#22)

Always do an index fund man! You’re not smarter than the market!

Morbo (#1,236)

Index funds will be the next bubble. A whole bunch of people throwing capital at something that everyone else (experts included) says is the best option.

God, this will be fun to watch.

deepomega (#22)

@Morbo Not sure how an index fund can be a bubble? Like, the nature of index funds is to constantly and automatically change, to match whatever’s performing well. Whereas a bubble is based on people assuming they know what will continue to perform well in the future.

Sallymander (#3,159)

@deepomega In the extreme case, everyone plows their money into index funds, and the distribution of capital among publicly traded companies remains stagnant! The column addresses this briefly, but obviously it is an unrealistic possibility because the opportunity for arbitrage would arise very fast. Sooooo I’m not sure what an “index fund bubble” would look like either…

Morbo (#1,236)

@deepomega
We got to see it in 2007, when someone made a run at the IWM.

We also saw a similar case in the silver ETF as it became apparent they were becoming the driving force in the market, and not the natural demand.

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