Investing With Index Funds Sensible but Difficult

Inspired by Henry Blodget's latest warning not to play The Losers' Game, Felix Salmon praises index investing. But, he admits, the investment world doesn't make it easy to practice the discipline.

In a Bogleheads presentation last fall, John Bogle indicated that investment in indexed stock funds has grown steadily over the last two decades. Nevertheless, Most wealth in stock funds is actively managed.

If index funds represent passive investing, ETFs (to the dismay of Bogle and others) are poster children for rapid-fire trading and speculation. Still nervous from those stock market zig-zags in recent months? All those aimless gyrations surely didn't come from trading in individual stocks.

Average holding period for shares in the SPDR S&P 500, according to Bogle's presentation: 3.2 days.

Are pros with algorithms and amateurs with INDX TRADR license plates making the market too scary for ordinary investors, men and women who might otherwise be able to build enough long-term wealth to need a trust officer?