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i'm not against market cap weighted index funds per se, although i have some concerns about S&P500 index funds at present. there is no doubt that indexing as a strategy possesses many competitive advantages over actively managed capital in many situations. with a large enough capital pool, it is low cost, and the strategy completely removes the psychology of misjudgment from the capital allocation process.

but the comparison numbers that the indexers often put up, are not risk adjusted, and therefore i am concerned that they could be misleading. in theory, you pay active managers to hold cash so that they can be selective on what they buy and when.


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