Business Week Lauds Indexing

Business Week's courageous February 22 articles on index indexing, are obligatory reading for any retail investor. Tapping a strong array of data surrounding indexing, Business Week writes convincingly and elegantly about the key issues in indexing.

With titles like "Who Needs a Money Manager?", Business Week shows its integrity by asking the tough questions that most finance magazines sidestep. And no wonder most magazines are shy about the subject, since actively managed funds spend Millions of advertising dollars (collected from excessive fund management fees) in those same publications. There must be terrific pressure in many of these magazines to ignore the inconvenient fact that index funds clobber actively managed funds year after year. No doubt Business Week's ad reps this week are taking the heat from their actively managed fund advertiser clients.

Kudos to Business Week's editors for pointing out the emperor has no clothes. Pick up an issue at your newsstand or read the articles in their entirety online.

Writers Anne Tergeson and Peter Coy pull no punches in "Who Needs a Money Manager?" Commenting that the record strongly supports the indexer's view that matching the market may be the best one can do, they conclude, "In this supercompetitive environment, the only investors with a sure advantage are those trading on illegal information. With the odds of being right 50% in every transaction, picking stocks that beat the benchmarks is no different from correctly calling a coin toss."

Wow. The financial trade press simply didn't write things like that in years past.

A fascinating short interview features a sheepish Byron Wein, U.S. equity strategist at Morgan Stanley Dean Witter, and a nearly gleeful John C. Bogle, founder of Vanguard Group.
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