Over-Indexing in Investing
In this episode of FOMO Investing, we kick off Q42024 with a chat about market indices and the pros and cons of index funds.
We discuss index funds and how Vanguard / Jack Bogle started a trend toward low-cost index funds. We discuss active management as compared with passive index fund investing. We discuss the incentives in fund management that drive asset managers to end up with diversified asset allocations that are closely correlated with indices. We challenge the conventional wisdom of "set it and forget it" indexing and diversified portfolios and highlight the benefits of having a concentrated portfolio (a la Buffet / Munger) when you have high-conviction ideas.
We discuss index funds and how Vanguard / Jack Bogle started a trend toward low-cost index funds. We discuss active management as compared with passive index fund investing. We discuss the incentives in fund management that drive asset managers to end up with diversified asset allocations that are closely correlated with indices. We challenge the conventional wisdom of "set it and forget it" indexing and diversified portfolios and highlight the benefits of having a concentrated portfolio (a la Buffet / Munger) when you have high-conviction ideas.
