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Are index funds pyramid schemes?

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  • Tangler
    replied




    !!!!!This is a peds test!!!!!

    Ok 8 responses, please no one else respond until OP clarifies position.

    This is how these threads derail!
    Click to expand...


    sorry......I did not see this (I was writing at the same time perhaps?) sorry you are right, sorry

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  • Tangler
    replied




    I think you’re confused about what index funds are or what a pyramid scheme is. Probably both.
    Click to expand...


    Sorry, but yes, CordMcNally is right. You are confused. There are some great books about index funds and what they are and why they are a good idea. I get no royalties (no hidden agenda) but I would invest in the following book (one of the best books on index funds). The Index Revolution by Charles D Ellis the audio version is $10, the kindle version is $10 and it might save you over 1 million, easily.

    If you were my family member,  I would insist you spend some time reading this book.

    Here is a link: https://www.amazon.com/Index-Revolution-Investors-Should-Join/dp/B06XC621FS/ref=sr_1_2?crid=2GZ8IZQBCP3MG&keywords=the+index+revolution+by+charles+d.+ellis&qid=1560103118&s=gateway&sprefix=the+index+rev%2Caps%2C131&sr=8-2

     

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  • Peds
    replied
    !!!!!This is a peds test!!!!!

    Ok 8 responses, please no one else respond until OP clarifies position.

    This is how these threads derail!

    Leave a comment:


  • pulmdoc
    replied
    No, they are not pyramid schemes. Perhaps if you explained yourself more we could understand the source of your confusion??

    Leave a comment:


  • Lordosis
    replied
    I know I posted this before but I always think of this at any mention of pyramid scheme.

    https://youtu.be/lC5lsemxaJo

    Leave a comment:


  • Hank
    replied
    Index funds are great! As a higher and higher percentage of pension and retirement funds move towards index investing, those genius stock pickers who can consistently outperform the market on a risk-adjusted, after tax basis over time should be able to make even more money betting against the blind indexers. (The evidence for this actually happening is scant at best.)

    Leave a comment:


  • CordMcNally
    replied
    I think you’re confused about what index funds are or what a pyramid scheme is. Probably both.

    Leave a comment:


  • Antares
    replied
    If you are asking whether one would outperform index funds if one could determine which companies within the index would do best and invest only in those, the answer is yes. But very few people can do that, and I’m sure I can’t.

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  • Anne
    replied
    Another great planet money episode that touches on the origin of index funds and why they're a good idea. (PM should start paying me for advertising!)

    https://www.npr.org/sections/money/2019/01/23/688018907/episode-688-brilliant-vs-boring

    Leave a comment:


  • Anne
    replied
    Either your question demonstrates that you don't understand what index funds are, or my understanding of index funds is way off.

    Also, you can't look at the last 100 years of index funds. They've only been around since the 1970s

    Leave a comment:


  • Peds
    replied
    How does the economy change an index fund at all?
    If all companies go to 0, we have bigger problems.

    I don't understand what your logic is trying to get at. Can you please clarify.

    Leave a comment:


  • runfast00
    started a topic Are index funds pyramid schemes?

    Are index funds pyramid schemes?

    As more investors use index funds - and that includes me as I am 60% VTI - does it become a pyramid scheme IF the underlying economy is unsound. Do index funds only work in a sound economy?

    I think index funds are a great investment. But how do I know if the underlying economy is sound? I guess we could look at the last 100 years of index funds to dispute this statement. Are there other ways to think about this.
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