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What’s an Index? – An Introduction to Market Indices

May 16 2008

When I meet with a prospective client for the first time, I try to explain a little about my approach to investments. On a couple of occasions when I’ve mentioned “index mutual funds,” someone has asked me, “what’s an index?” I’m always happy to get this kind of question; such questions help me remember that not everyone on the planet is a personal finance geek (and that’s a good thing).

The Earliest US Market Index

The idea of a market index, in the US at least, apparently began with Charles Dow, the founder of the venerable Wall Street Journal. He …

The Sage of Omaha says, “Buy Index Funds”

May 05 2008

The question of whether one should use a passive investment strategy (in which you buy an entire market index) vs. an active strategy (in which you try to figure out which specific securities will outperform and invest in those) is one that can produce passionate responses. Express a strong opinion in favor of one dogma or the other in the midst of a bunch of financial types, and a brawl may ensue.

So it’s interesting to hear that Warren Buffett, who has made his fortune and reputation as an active investor, has publicly opined that index funds can be a …

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