Re: Investments

Peter C. McCluskey (pcm@rahul.net)
Wed, 28 May 1997 22:36:43 -0700


hanson@hss.caltech.edu (Robin Hanson) writes:
>Here's what I meant. Imagine that everyone in the world had the same
>investment portfolio, with the same relative fraction of their wealth
>in each investment made anywhere. Rich people would have more shares
>of this portfolio, but otherwise everyone is the same. In this
>situation, I would say no one is making a bet, though everyone does
>suffer risk regarding the performance of the world economy as a whole.

>Since actual index funds are not exactly the average world investment,
>they are bets regarding the difference. But as you put together
>enough indexes and approach the average, your total portfolio
>approaches not making a bet.

I see your point now, and it is a reasonable goal for the average
investor, but index funds as they exist today aren't trying to track
an average person's investments. They're trying to track the average
stock and/or bond portfolio. It isn't as easy for the average person
to emulate an average investment in a home.

-- 
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Peter McCluskey |                        | "Don't blame me. I voted
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