Comments on: Fundamental indexing: A magic formula?

By: John Smith

John Smith — Sun, 11 Sep 2011 03:31:49 +0000

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By: Derek Illchuk

Derek Illchuk — Fri, 01 Oct 2010 04:28:49 +0000

“I’ve always thought that the way market indexes are weighted doesn’t really make sense.”

The cap-weighted funds are as such to avoid mucho rebalancing. So, if Company A doubles in price, the fund just lets it be, saying, “sure… whatever”.

By: Pop

Pop — Sat, 12 Jun 2010 02:40:51 +0000

Thanks Tage, just fixed it.

By: Tage

Tage — Sat, 12 Jun 2010 01:06:57 +0000

Great article, loved the part about index funds not being the “be all end all” of investing for the average joe.

I found a typo that you might want to fix, “**The might** not sound crazy, until you start to think about how that’s ended up in practice.”

I don’t want to nit pick, but simply wanted to alert you.

By: Kyle

Kyle — Tue, 08 Jun 2010 16:04:40 +0000

Thank you for sharing this with us. I’ve always thought that the way market indexes are weighted doesn’t really make sense.

I had never heard of fundamental index funds before. I think I’ll have to look deeper into these the next time I adjust my retirement accounts.

By: Rob Bennett

Rob Bennett — Tue, 08 Jun 2010 12:56:57 +0000

I was kind of right, but why not design a fund tried to weight money in each company based on their economic contributions to the economy as a whole rather than to how high-priced they were?

This sentence nails it.

Bogle revolutionized middle-class investing with his promotion of indexing. Unfortunately, each of us is only able to see so far ahead from where we stand at a particular point in time; Bogle in the 1970s was not able to see what is obvious to a good number of us in the post-Bogle era of 2010. Bogle himself does not fully comprehend how important a change indexing represents. What he put forward in the 1970s was a first draft approach. It has been left to the second generation of indexers to make the changes in Bogle’s ideas required to make indexing work for the long-term investor.

You’re right that a lot of people are finding it a huge struggle to make the needed change, Pop. That’s why God (or Evolution, if you prefer) invented economic crises. The crisis brings pain, and the pain will in time bring on an openness to new ideas that does not today exist, and the new ideas will bring us all a level of wealth that we cannot today imagine as possible. This crisis is the first step on our journey to The Golden Age of Middle-Class Investing and the revitalization of our free market economy.

Thank goodness for economic crises!

Rob