Tuesday, April 24, 2007

Index funds: whether you're a behaviorist or an efficent marketeer

I used to wonder if index funds would still work if everyone signed up for them. Presumably not, but there seems little risk of that.

But do index funds work if behaviorists are right and the markets are not rational? DeLong summarizes a very readable Justin Fox discussion of the topic. Supposedly index funds still work. Now about those Hedge Funds?

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