Quote:
Originally Posted by bmw335xi
The S&P 500 is made up of large cap stocks, there is no chance 300 will disappear in 5 years. Also, bad esrnings reports will not violently drop the S&P 500 unlike owning an individual stock during a bad earnings call.
Also, you want to own the company that is being bought out, not the company who is doing the buying in most cases when talking about individual stocks.
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https://www.marketwatch.com/story/i-...und-2016-05-09
Okay, maybe 200 companies will go out of business then.
Think about how many companies on that list have only artificial demand from people purchasing index funds.
Also, the average investor is not going to have access to insider trading and be able to purchase the company being acquired. By the time the retail investor is made aware, the company being acquired is already up 50%.
Might as well just go with the trend and buy all big guys that are heavily capitalized in the event of a downturn. I suppose a risk is anti-trust, but that's just my opinion.
I guess one way somebody can figure out what they want to invest in is to compare returns of that portfolio with an index fund, although that will only give them a historical view of what did well.