Too much of a good thing can end up being bad. That includes using a benchmark index as the basis for an investing apparently.
In the July 2010 paper (download here from SSRN; acknowledgement to Stingy Investor where I found the link) On the Economic Costs of Index-Linked Investing, NYU prof and NBER research associate Jeffrey Wurgler reviews some research results that are disquieting for investors who follow a passive index strategy based on popular indices such as the S&P 500.
Wurgler says: “… the increasing popularity of index-linked investing may well be reducing its ability to deliver its advertised benefits …” The problems: Read More…