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>> What I am missing?
>> Mario
I know that I am missing the point of discussion but there are some other
thought about "stocks vs index"
Should we buy an index or the stocks that compose that index? Let say the
Diamonds (DIA) or 30 stocks from the DJIA, XAU (by the way I do not know
how one can buy XAU except through the options and that introduce entire
new dimension in trading) or 10 mining stock that compose XAU?
If you buy index and one company in the index disappears (let say into
bankruptcy) the index will substitute the company by a new one, but if you
bought the individual companies of that index, your money in bankrupt
company are gone (mostly). To get back to index equivalent you have to
shell out new money for the company that in now a new member of the index.
On the other hand, if you buy an index you can not "outperform" it.
(Remember the war cry of the money managers: "I will outperform the SPX"?).
If you know how to select "cats of the Dow" (as opposite to the "dogs of
the Dow") you can outperform the Dow (but then you run the risk of the
individual stocks discussed above).
In short there is no free lunch still.
Sorry for diverting the discussion from its original pass.
Waddling Alex.
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