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SportsDino · 02-05-2009, 02:22 PM

Good index funds have risk. A diversified bet is still a bet.

If you want to think of it like a roulette wheel, you can consider the index fund bet being a bet on both black and red. You look good a whole lot of years, then you hit green (say economic crisis) and well you are out of luck. If the rate of return is right on average you will probably survive those green years as well overall.

They are not invincible, that is the thought I'm railing against... although for the average investor is it a better option... okay my practical side of the brain can see that as an option. But if you want to get really into thinking about it, technically you could play timing games on index funds of the whole economy as well. For instance, I'm sure most people would appreciate dodging the DJIA going from 12000+ to 8000 territory.

Any stock, bond, or collection of stocks and bonds, is GAMBLING (by definition, no risk = no reward... ignore poor perverted treasuries for a moment). Lets make that the first thing we teach in kindergarten, then move on to the discussion of average rates of return and default risk and economic downturns and all that jazz.

All that noise aside, I would rather people buy an index fund then follow the picks within this thread without studying the stuff themselves. As Tekneek says, its a lot of work, and for the most part probably not worth the costs/risks.

02-05-2009, 02:22 PM	#46
SportsDino College Prospect Join Date: Oct 2001	Good index funds have risk. A diversified bet is still a bet. If you want to think of it like a roulette wheel, you can consider the index fund bet being a bet on both black and red. You look good a whole lot of years, then you hit green (say economic crisis) and well you are out of luck. If the rate of return is right on average you will probably survive those green years as well overall. They are not invincible, that is the thought I'm railing against... although for the average investor is it a better option... okay my practical side of the brain can see that as an option. But if you want to get really into thinking about it, technically you could play timing games on index funds of the whole economy as well. For instance, I'm sure most people would appreciate dodging the DJIA going from 12000+ to 8000 territory. Any stock, bond, or collection of stocks and bonds, is GAMBLING (by definition, no risk = no reward... ignore poor perverted treasuries for a moment). Lets make that the first thing we teach in kindergarten, then move on to the discussion of average rates of return and default risk and economic downturns and all that jazz. All that noise aside, I would rather people buy an index fund then follow the picks within this thread without studying the stuff themselves. As Tekneek says, its a lot of work, and for the most part probably not worth the costs/risks.