Many everyday Americans invest in S&P 500 index ETFs largely due to Buffett's endorsement. They’ve been led to believe that these funds offer low costs and diversification among the top 500 companies to weather financial storms.
However, as a select few stocks begin to dominate those indices, the associated risks increase rather than decrease. If there aren't limits on how much any single stock can contribute to the index, it becomes more like a bet on that one
company alone. Essentially, by investing in an index of 500 stocks, you might be predominantly investing in just 10, with the remaining 490 merely as a
Many everyday Americans invest in S&P 500 index ETFs largely due to Buffett's endorsement. They’ve been led to believe that these funds offer low costs and diversification among the top 500 companies to weather financial storms.
However, as a select few stocks begin to dominate those indices, the associated risks increase rather than decrease. If there aren't limits on how much any single stock can contribute to the index, it becomes more like a bet on that one
company alone. Essentially, by investing in an index of 500 stocks, you might be predominantly investing in just 10, with the remaining 490 merely as a