No. of Recommendations: 1
The reasoning is that stock prices are not a random walk (50-50 either up or down) if this were the case the index would be the same as it was 40 years ago. (inflation adjusted) Plus, no one would invest.

Now I don't know to what extent I do or don't buy into random walk myself, but this is a misunderstanding. If that was the case don't you think that along the way somewhere, one of the hundreds of academic minds that have studied it would have realized it?

A random walk can still get you somewhere. In fact, it's often used to heuristically solve very difficult problems that can't be solved in traditional manners. A random walk can have a bias in one direction or the other, it can have a direction that it progresses in. It's just saying that it's next move it unpreditable, not that the overall direction is.

There's a difference between saying it's entirely random and it's a random walk. That's why they use the latter and not the former (in fact, if it was the former, it wouldn't have adjusted for inflation either).


On your bottom list there:
2) There are bond indexes too, short term, as well as REIT, precious metals, etc. About the only index I've never heard of is a MMF one, but hey, it's possible (although probably fairly pointless). So specifying index investing in no ways specifies any level of risk (other than > 0, I guess).
4) I agree that most, or at least many people, believe they can beat it. But that does not mean that "you're better off trying." I tried to make that distinction moving from 'good' (you can try to beat it, but only if you want, 6 of one, half a dozen of another) to 'fair' (you can beat it and you really should try).
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