Over the past several years there’s been a lot of derogatory talk against traditional market cap weighted indexes.
And one of the oft-repeated arguments against traditional indexing that you’re guaranteed to read about or see is something like, “Market cap weighted indexes overweight overvalued large-cap stocks and underweight undervalued smaller-cap stocks.”
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Investing and gambling share at least one common thread; it’s all about odds. And depending on how you build your portfolio of investments, you will either increase or decrease your odds of investment success.
(Audio) The Stock Market’s Last 10% Correction + How to Judge Performance Properly
The latest data from Morningstar’s Active/Passive Barometer illustrates how investors that buy actively managed mutual funds are decreasing their odds of receiving satisfactory performance returns.
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Last year, Warren Buffett said he would direct the trustees of his estate to put 90% of his remaining assets in an S&P 500 index fund and 10% in short-term government bonds. Is there a better approach for individual investors to follow?
Although popular benchmarks like the S&P 500 get most of the headlines,
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Never mind how U.S. stocks are at all-time highs. People are pouring more money into stock tracking ETFs.
The top three ETFs by asset inflows over the past week were the iShares S&P MidCap ETF (NYSEARCA:IJH), iShares S&P 500 ETF (NYSEARCA:IVV), and the PowerShares Nasdaq 100 ETF (NasdaqGM:QQQ).
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What do investors love and what do they hate? Where are they putting their money?
Analyzing the money inflow/outflow data for ETFs gives us some clues.
In a study of U.S. ETF flows just published by the SPDR ETFs, David B. Mazza, the Head of Research observed:
“Equities drove a disproportionate share of September’s inflows with close to $19.7 billion being added.
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