APPENDIX Q
Stock Indexes
BY ANALYZING A COMPANY well and by remaining active in the company’s governance, an investor can achieve sustained and significantly positive returns from an equity investment, compared to the market as a whole or a representative index.
At the same time, for the purposes of portfolio investment, it is a good idea to invest in one or more indexes, whether via a mutual fund or, for the professional, via an exchange-traded fund. We need to hedge against the bet that our own analysis is sound.
An index is a representative selection of stocks that captures a market as a whole, whether globally or nationally. A growing number of indexes have a theme or flavor, such as social responsibility, but in our view these are not really ...
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