INDEXED MANAGEMENT | TRADING TIPS

Jordi Martí, professional trader and Head of Studies at La Factoría, explains the concept of INDEXED MANAGEMENT, one of the best ways to ensure profitability while trading. Learn about the advantages and continue training in our channel.

Video transcription

Hi! Today I am going to talk about something that is very fashionable: indexed management or passive management.

Indexed management is copying exactly what the indexes are doing.

Mutual fund managers are generally unable to outperform the index. You can find managers who, for one year, two, three,...

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Hi! Today I am going to talk about something that is very fashionable: indexed management or passive management.

Indexed management is copying exactly what the indexes are doing.

Mutual fund managers are generally unable to outperform the index. You can find managers who, for one year, two, three, four or five years are capable of beating you more to the market than the index is capable of getting, but these are often streaks and these streaks end. It is really difficult to find fund managers who are capable of consistently outperforming indices over the years. Therefore, indexing or copying what the index does is one of the best ways to ensure a return.

What are the advantages of indexed management: Less commissions There is no team of analysts and managers deciding which stocks to put into the fund or which stocks to take out of the fund (you have the full index). It has a great diversification. If we indexed it to the sp500 we have 500 companies. That is, if a bankruptcy, I have 490 left. The simplicity of operation. From a laptop at home we can index ourselves. Today, through etfs, we can buy an index as if we were buying a stock.

If you want to invest but don't want headaches, I recommend that you index. Indexing will do you better in the long run than most fund managers and is much cheaper.

Remember, as George Soros says “it doesn't matter if you are right or not, what matters is how much you win, if you are right and how much you lose, if you are not”.

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