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Originally Posted by roni
With a long enough time frame, index funds make perfect sense. The S&P is close to being back where it was in 2000. The Nasdaq is still about 50% of what is was before the tech crash back then, so if you had a lot of money in an index fund that tracked the Nasdaq, you'd still be very unhappy.
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Well I think their point is that while that might be the case, you might nevertheless be happ
ier -- usually several points happier, in fact-- than somebody who had a managed mutual fund focused on the Nasdaq then. Or that is to say, their point is that managed mutual funds really by and large just suck.
Index funds are not their top pick overall. Indeed the stock market isn't their top investment pick overall, if you've got a new small business you're starting up, for example, or other such things. But they're clearly their top pick for those who again may not have the time, energy or inclination to do all the research themselves. A sort of way out between that as a rock and mutual funds managers and fees as the hard place.
Steve