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Are index funds right for me?
What they are, how they work, where to learn more.



Jason's Answers

Online chat at Morningstar.com
03/01/2002: www.morningstar.com
Among other things, Jason discusses investment risk, diversification, index funds, market timing, and how the mutual fund industry should get its act together. (Note: free registration required.)
http://news.morningstar.com/doc/article/0,1,13727,00.html


Here Come the Bogleheads
09/01/2001: Money Magazine, Vol. 30 No. 9
On A Sunny Summer Weekend, Dozens Of Strangers Gather To Hear Jack Bogle Preach Vanguard\'s Investing Gospel. Don\'t They Have Anything Better To Do?
http://money.cnn.com/best/magazine_archive/2001/09/VAN.html;
http://www.jasonzweig.com/uploads/9.01Bogleheads1.pdf;
http://www.jasonzweig.com/uploads/9.01Bogleheads2.pdf


“I don't know, I don't care”
08/29/2001: 4:44 p.m. ET
Indexing lets you say those magic words.
http://money.cnn.com/2001/08/29/investing/Zweig/index.htm


Index funds on PBS
07/31/2001
Jason talks about the pros and cons of index funds in an interview with Betsy Karetnick of PBS’s “That Money Show.” View the video here:
http://www.pbs.org/wnet/moneyshow/makeover/071301.html


Is the S&P 500 Rigged?
07/13/2001: Money Magazine
The ultimate market measure has been turned inside out -- and may never be the same again. Investors beware.
http://money.cnn.com/2001/06/13/zweig_on_funds/zweig_on_funds/;
http://www.jasonzweig.com/uploads/7.01S&P500.1.pdf;
http://www.jasonzweig.com/uploads/7.01S&P500.2.pdf


“Fat Tails, Thin Ice”
06/01/2001: Morningstar
In this speech, the keynote address to the 2001 Morningstar Investment Conference, Jason talks about how financial planners misunderstand and misuse the lessons of history: They cite academic studies “proving” investment theories without ever reading them; they extrapolate past data without questioning the quality and durability of the numbers; and they fail to communicate investment risk in terms clients can understand. Jason offers suggestions on how to do better.
http://datalab.morningstar.com/Midas/Home/ArticlesResearch/DL_Article_FatTa...


Wall Street\'s Wisest Man
06/01/2001: Money Magazine, Vol. 30 No. 6
Getting rich off stocks is simple, says Charles Ellis. Here\'s how.
http://money.cnn.com/best/magazine_archive/2001/06/FUN.html;
http://www.jasonzweig.com/uploads/6.01Ellis.pdf


Do you sabotage yourself?
05/01/2001: Money Magazine, Vol. 30 No. 5
Daniel Kahneman has done more than anyone else to explain why most of us make so many mistakes as investors--and what we can do about it.
http://money.cnn.com/magazines/moneymag/moneymag_archive/2001/05/01/301274/...;
http://www.jasonzweig.com/uploads/5.01Kahneman1.pdf;
http://www.jasonzweig.com/uploads/5.01Kahneman2.pdf;
http://www.jasonzweig.com/uploads/5.01Kahneman3.pdf


Mutual Competition
08/01/2000: Money Magazine, Vol. 29 No. 8
Are the new rivals to traditional funds – like folios and exchange traded funds (ETFs) -- a better bet?
http://money.cnn.com/best/magazine_archive/2000/08/FUN.html;
http://www.jasonzweig.com/uploads/8.00ETFsAndFolios.pdf


Performance Review: Part 3
08/01/2000: money.com
I've been answering your questions in Mutual Fund Mailbag for just about a year now, and I think I've gotten things mostly right. Just to be sure, though, I've asked some of the investing world's top minds for their two cents. In this three-part series, I square off with Vanguard's John Bogle, efficient-market theorist William Bernstein, and finance professor Terrance Odean on the issues you've written in most about. This week: Odean slaps me upside the head.
http://robots.cnnfn.com/2000/08/01/mailbag/mailbag/index.htm


Performance Review: Part 2
07/25/2000: money.com
I've been answering your questions in Mutual Fund Mailbag for just about a year now, and I think I've gotten things mostly right. Just to be sure, though, I've asked some of the investing world's top minds for their two cents. In this three-part series, I square off with Vanguard's John Bogle, efficient-market theorist William Bernstein, and finance professor Terrance Odean on the issues you've written in most about. This week: Bernstein gives me a bashing.
http://robots.cnnfn.com/2000/07/25/mailbag/mailbag/index.htm


Performance Review: Part 1
07/18/2000: money.com
I've been answering your questions in Mutual Fund Mailbag for just about a year now, and I think I've gotten things mostly right. Just to be sure, though, I've asked some of the investing world's top minds for their two cents. In this three-part series, I square off with Vanguard's John Bogle, efficient-market theorist William Bernstein, and finance professor Terrance Odean on the issues you've written in most about. This week: Bogle beats me up.
http://robots.cnnfn.com/2000/07/18/mailbag/mailbag/index.htm


Index funds
06/01/2000: IndexFunds.com
Should you have all your money in index funds? Jason debates the editor of IndexFunds.com on whether actively-managed mutual funds serve any legitimate purpose at all:
http://www.indexfunds.com/archives/articles/staff_20000616_from_the_message...


When index funds don't work
05/24/2000: money.com
Passive investing almost always beats active management. There are cases, though, when it just doesn't add up. (See also July 18, 2000.)
http://robots.cnnfn.com/2000/05/24/mailbag/mailbag/index.htm


Prodigal son
05/08/2000: money.com
Many investors have strayed in search of tech-sized returns, but repentant sinners can get back on the true path. (See also August 1, 2000.)
http://robots.cnnfn.com/2000/05/08/mailbag/mailbag/index.htm


Investing internationally
05/01/2000: CNN
In this appearance on CNN’s “In the Money,” Jason discusses using mutual funds to invest overseas with safety.
http://www.cnn.com/TRANSCRIPTS/0005/08/itm.00.html


High concentration
04/11/2000: money.com
The Vanguard Growth Index fund has nearly half of its assets in just 10 stocks. How much is too much?
http://robots.cnnfn.com/2000/04/11/mailbag/mailbag/index.htm


To weight or not to weight?
10/28/1999: money.com
Jason advises a reader who wonders if he should weight certain sectors of the market more heavily than others, and debunks the idea that small cap stocks tend to outperform large caps over time.
http://robots.cnnfn.com/1999/10/28/mailbag/mailbag/index.htm


All dressed up and no place to invest
10/07/1999: money.com
Jason advises a reader who's managed to save a lot of money, but doesn't know where to invest it.
http://robots.cnnfn.com/1999/10/07/mailbag/mailbag/index.htm


Bogle: Going But Not Forgotten
10/01/1999: Money Magazine, Vol. 28 No. 10
No one would have expected John C. Bogle, iconoclastic founder of Vanguard funds, to go gentle into that good night. And he didn\'t. When top executives at Vanguard began pushing their feisty senior...
http://money.cnn.com/best/magazine_archive/1999/10/bogle.html;
http://www.jasonzweig.com/uploads/10.99Bogle.pdf


“Expert Q&A”
08/01/1999: morningstar.com
In this online chat, Jason fields questions from Morningstar users about everything from stock-picking “systems” to index funds, how and why to use a broker, investing in corporate bankruptcies, saving for college, the fine points of bond funds, and the ethics of financial journalism. [Conversation 676: in the “Jump to #” box, enter 676]
http://socialize.morningstar.com/NewSocialize/asp/fullconv.asp


Cast a wide net
08/03/1999: money.com
Jason explains the logic behind investing in a fund based on a total stock-market index like the Wilshire 5000.
http://robots.cnnfn.com/1999/08/03/mailbag/mailbag/index.htm


Are Index Funds a Tax Disaster Waiting to Happen?
07/20/1999: money.com
In his online mailbox, Money Magazine's mutual funds columnist, Jason Zweig, has gotten several letters warning that index funds are ticking tax time bombs waiting to blow their shareholders to bits in the next market decline. Should you worry?
http://robots.cnnfn.com/1999/07/20/mailbag/mailbag/index.htm


Mutual Fund Tax Bombs
07/01/1999: Money Magazine, Vol. 28 No. 7
How to run up a $10,000 tax bill without even trying
http://money.cnn.com/best/magazine_archive/1999/07/fnd07_fi.html;
http://www.jasonzweig.com/uploads/7.99TaxBomb.pdf


Mutual Bet: Beating the Odds?
10/01/1997: PBS
In this interview for PBS’s The News Hour with Jim Lehrer, Jason discusses the chronic underperformance of mutual funds: what causes it and what investors can do about it. Transcript available here:
http://www.pbs.org/newshour/bb/business/july-dec97/mutual_10-1.html


How many stocks do you need?
01/30/2001: money.com
Probably a lot more than you think, if you want a diversified portfolio.
http://money.cnn.com/2001/01/30/zweig_on_funds/zweig_on_funds/


Give diversity a chance
02/14/2001: money.com
A lot of individual investors hate spreading their bets. But it works.
http://money.cnn.com/2001/02/14/zweig_on_funds/zweig_on_funds/


How to Beat 77% of Fund Investors Year after Year
08/01/1997: Money Magazine
A new argument about why most investors are better off in an index fund.
http://money.cnn.com/magazines/moneymag/moneymag_archive/1997/08/01/229758/...


Will Index Funds Blow up on You?
09/01/1997: Money Magazine
A look at the arguments against indexing, and why they do not hold water.
http://www.jasonzweig.com/uploads/9.97IndexFunds.pdf


Confessions of a Fund Pro
02/01/1999: Money Magazine
A manager explains how the deck is stacked against you: a chat with the pathologically candid Ted Aronson. (The second link offers a more complete transcript.)
http://money.cnn.com/magazines/moneymag/moneymag_archive/1999/02/01/254531/...;
http://money.cnn.com/1999/01/15/zweig_on_funds/zweig_on_funds/index.htm;
http://www.jasonzweig.com/uploads/2.99Aronson1.pdf;
http://www.jasonzweig.com/uploads/2.99Aronson2.pdf


Flavor of the Month
03/01/1999: Money Magazine
Are enhanced index funds (and 184% returns) too good to be true?
http://money.cnn.com/magazines/moneymag/moneymag_archive/1999/03/01/256200/...;
http://www.jasonzweig.com/uploads/3.99EnhancedIndex.pdf


Swept Away by Index Funds
12/01/2004: Money Magazine
Is fundamental indexing the answer to a fundamental problem?
http://www.jasonzweig.com/uploads/12.04.Fundamental.pdf


What a Mutual Fund Is Worth to You
11/01/2005: Money Magazine
A new measure of fund expenses shows that you may be paying far more than you think.
http://www.jasonzweig.com/uploads/11.05Expenses.pdf


Is Your Fund Pro Finally a Prince?
03/01/2006: Money Magazine
New research claims that the average mutual fund has beaten the market. The research is wrong.
http://www.jasonzweig.com/uploads/3.06ActiveVsIndex1.pdf;
http://www.jasonzweig.com/uploads/3.06ActiveVsIndex2.pdf


The Man Who Explained It All
06/01/2007: Money Magazine
Bill Sharpe`s pioneering theory on the interplay between investment risk and return won him a Nobel Prize. Now he wants to help you use his work to make better financial decisions.
http://money.cnn.com/2007/05/21/pf/sharpe.moneymag/index.htm;
http://www.jasonzweig.com/uploads/6.07Sharpe.pdf


What to Do When Your Fancy ETF Goes RIP
08/02/2008: The Wall Street Journal
The coming wave of closures in the ETF business
http://online.wsj.com/article/SB121762993353705851.html


Tempest-Tossed? Take Some Control
03/04/2009: The Wall Street Journal
Instead of plunging in and out with both feet, take some baby steps.
http://online.wsj.com/article/SB123612913479324703.html


Will Leveraged ETFs Put Cracks in the Market Close?
04/18/2009: The Wall Street Journal
A look at whether leveraged ETFs may be responsible for higher market volatility.
http://online.wsj.com/article/SB124000593149930309.html


Are ETFs Causing an Emerging-Markets Bubble?
11/07/2009: The Wall Street Journal
Is too much ``mindless money`` inflating the prices of stocks in the developing world?
http://online.wsj.com/article/SB125754825097734691.html


Inefficient Markets Are Still Hard to Beat
01/09/2010: The Wall Street Journal
Markets may not be efficient, but that doesn`t make beating them easy.
http://online.wsj.com/article/SB10001424052748703535104574646530815302374.h...


Watch Out for Hidden Tax Traps Inside ETFs
04/17/2010: The Wall Street Journal
A look at the tricky tax rules on commodity and currency ETFs.
http://online.wsj.com/article/SB10001424052702304628704575186433316749798.h...


Are ETFs a Menace -- Or Just Misunderstood?
11/13/2010: The Wall Street Journal
Do exchange-traded funds pose a ``systemic risk``?
http://online.wsj.com/article/SB10001424052748704865704575610833659564558.h...


Are Index Funds on Track to Become Even Harder to Beat?
11/27/2010: The Wall Street Journal
New techniques that should increase the efficiency of index funds.
http://online.wsj.com/article/SB10001424052748704008704575638583030174768.h...


Fee Deflation: ETF Costs Dwindle, but Don`t Disappear
09/29/2012: The Wall Street Journal
As expense ratios approach zero, investors need to watch a range of other costs.
http://jasonzweig.com/online.wsj.com/article/SB10000872396390444752504578024433853129780.html


Simple Index Funds May Be Complicating the Markets
02/18/2012: The Wall Street Journal
Are index funds and ETFs making all financial assets dangerously interconnected?
http://online.wsj.com/article/SB10001424052970204059804577229201842045734.h...


Dow 1,339,410: The Latest Milestone
03/03/2012: The Wall Street Journal
As the Dow Jones Industrial Average passes 13000, a closer look at what the levels of stock indexes mean.
http://online.wsj.com/article/SB10001424052970204571404577257373285657442.h...


ETFs on the Hot Seat
10/19/2011: WSJ Online: Total Return blog
Tune in to Congressional hearings on ETFs.
http://blogs.wsj.com/totalreturn/2011/10/19/etfs-on-the-hot-seat/


Correlation Quackery
10/20/2011: WSJ Online: Total Return blog
The latest lame argument from crybaby stockpickers: They can`t do well when correlations are high.
http://blogs.wsj.com/totalreturn/2011/10/20/correlation-quackery/


Inefficient, Schminefficient
01/11/2012: WSJ Online: Total Return blog
What evidence is there that markets other than blue-chip stocks are easier to beat? Not much.
http://blogs.wsj.com/totalreturn/2012/01/11/inefficient-schminefficient/


When Cheap Funds Cost Too Much
10/13/2012: The Wall Street Journal
How to shop wisely among the increasingly popular `ETF managed portfolios.`
http://jasonzweig.com/online.wsj.com/article/SB10000872396390444657804578050501097576018.html


Are Diamonds an ETF`s Best Friend?
08/07/2012: WSJ Online: Total Return blog
Before long, there may be an ETF that is pegged to gem-quality diamonds.
http://blogs.wsj.com/totalreturn/2012/08/07/are-diamonds-an-etfs-best-frien...


Inside the Self-Driving Index Funds That Finish First
01/12/2013: The Wall Street Journal
A look at the simple, cheap, high-performing index funds in the Thrift Savings Plan for federal employees.
http://online.wsj.com/article/SB10001424127887324442304578235892062924114.h...


The Retirement Gamble
04/23/2013: PBS Frontline
Video interview on 401(k)s with PBS` `Frontline.`
http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/


How the Market-Matching Funds That Beat the Market Do It
01/18/2013: WSJ Total Return Blog
Further notes on how the TSP funds for U.S. employees work.
http://blogs.wsj.com/totalreturn/2013/01/18/inside-the-market-matching-fund...


Other Resources

Berkshire Hathaway shareholder letters

Link to Warren Buffett's annual letters to shareholders, 1977 to date. If you want to learn how to think logically and clearly about all the issues that confront investors -- from inflation to stock options to diversification to index funds to the true meaning of risk -- Buffett's brilliant letters are the first (and often the final) word. He will never steer you wrong, and the learning is free and without obligation.
http://www.berkshirehathaway.com/letters/letters.html


Efficient Frontier

Link to William J. Bernstein's "Efficient Frontier" online newsletter, where he serves up opinion that is, at one and the same time, both biting and mathematically rigorous, both challenging and fun to read. Full of righteous anger at the knaves and nincompoops who dish out most financial advice, Bernstein is an invigorating breath of fresh air.
http://www.efficientfrontier.com/


Bogle Financial Markets Research Center

This site, featuring John C. Bogle's speeches and research papers, enables you to keep up with the latest thinking of the founder of the Vanguard Group. Jack Bogle is probably the best friend the individual investor has ever had, and the materials archived here are rich with insights into how the money management business really works and how you can take control of your own financial destiny.
http://www.vanguard.com/bogle_site/bogle_home.html


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JasonZweig.com is my place to tell you what I think about a whole lot of investing stuff. I’m the only one responsible for my opinions, but I can’t guarantee they’ll always be right. If you don’t like what I say or it turns out to be wrong, I’m sorry; you can’t sue me. The material you find here is not meant as specific investing advice for you, and if you use it that way and something goes wrong, that’s your problem, not mine. To get individualized investing advice, you need to do your own homework or else hire a financial advisor, a tax professional, or a lawyer to do it for you (and even then, you’d better watch like a hawk!). If you think anything on this website is an invitation for you to buy or sell any investment, you need to get your head examined. What’s more, I’m not soliciting business of any kind, because I don’t have any business to solicit. (Believe it or not, I don’t want your money.) I’ll do my best to avoid any conflicts of interest in running this website, but I don’t have silvery wings and a halo, and somebody might manage to corrupt me. If that happens, it’s your job to notice and to be disgusted by it. In short, none of my best efforts to be honest, sensible, and trustworthy exempt you from your constant duties to treat what I say with the same skepticism you should treat anyone’s pontification about investing. I wish you good luck!

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