Markets are not exchanges, exchanges are not indexes, and indexes are not investments. Yet, these words are often interchanged in discussions about index investing. I hope this will add some clarity to the discussion.
Every quarter since 2008, my company has recorded a quarterly conference call for clients and anyone else who wishes to listen. The call covers economic conditions, market trends, investment strategies, and current topics that are important at the time.
Mutual fund performance is predictable. Like a broken record, mutual fund managers who attempt to outperform the markets have once again failed to deliver on their promise in most categories. That’s the bottom line of a new report released by S&P Dow Jones.
It was a madhouse. Traders said they’ve never seen anything like it. Regulators snapped into action. President Obama was immediately briefed. Long-term index fund investors yawned.
I am often asked how market valuation plays into asset allocation decisions. Should an investor consider reducing equity exposure when the market is trading at a high price relative to earnings? My standard answer is no, but in some situations, yes.