If whole market means whole market, then such investments are exposed to companies who are fairly valued, companies who are massively overvalued, and companies who are massively undervalued, and the whole range in between.

If you want to start picking and choosing which companies are overvalued and which are undervalued, don’t invest in whole market funds. But most people are not good at that!

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u1hcw9nx an hour ago | parent | next [-]

the problem:

The Nasdaq 100 and FTSE Russell made a rule change that allows SpaceX to enter index without mormal time for price discovery. Most index funds have rebalance day just 5 days after IPO. S&P also made rule change for S&P Total Market Index and Dow Jones US Total Stock Market Index, but left SP500 intact.

Nothing wrong with SpaceX or Anthropic getting into indexes with fair rules, this rule change is pure creed+corruption.

	▲	benl an hour ago \| parent [-]
		Those funds are not whole market funds. But there are things to say about your point too. I’ve commented on that in other threads.

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nativeit an hour ago | parent | prev | next [-]

Are there really 10-100x undervalued companies listed on indexes that haven’t been noticed?

	▲	benl a minute ago \| parent [-]
		Yes. There are probably a dozen or more across the SP500 and Russel 2000 that will 10-100x in the next 5-10 years. The trick is to be able to identify them!

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nibbleyou 2 hours ago | parent | prev | next [-]

I don't understand this logic. Does whole market mean scamming companies too?

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tony69 2 hours ago | parent | next [-]

Yes. That’s what passive investing is. You give money to the passive fund, the passive fund buys the market. No regard to price or any other metric.

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matwood an hour ago | parent | prev [-]

Fun fact, both Enron and Lehman Brothers were in the S&P 500 when they went bankrupt. So yes, the whole market or even the market of the largest companies, includes some that may not be great companies. The beauty of the index is you don't have to know or care, since it'll take care of itself over time.

	▲	derektank 5 minutes ago \| parent [-]
		>The beauty of the index is you don't have to know or care, since it'll take care of itself over time As long as there are active investors in the market conducting price discovery. Which there always will be, just pointing out that someone has to care, even if you don’t

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ericd 3 hours ago | parent | prev [-]

Also, there’s a long history of companies that people yell about being overvalued being the drivers of index returns, because one of the major drivers is growth rate, whereas retail investors tend to look mostly at current state.