/biz/ - Business & Finance

>>19026002
Yeah, you see the exposure risk, right? I think short-term, the over-weighting in tech is going to result in downward pressure on indices once the markets begin tracking the economy again, OR, once people cycle out of tech and into other sectors with larger potential returns.

Long term, index investing is easy and suits most people. There's nothing fundamentally wrong with that from a utility standpoint. It's easy diversification: modest rewards for modest risk. The problems that active fund managers have with it are more structural in nature, but no point in getting into that right now.

Pic related shows an alternative to VTI (Orange) you could consider. RSP (Black) is an equal-weight S&P 500 index ETF that attempts to offset some of the negatives of market cap weighted funds. It behaves very similarly to VB (Red), if you'll notice, because it allows for the smaller companies with more potential to grow to shine, whereas shields you from some of the pullback when the larger companies disappoint. That means that it reduces some of the over exposure to tech that you'll have by holding both QQQ and VTI, while giving you some of the performance benefits of holding VB (without as much associated risk).