Most index funds index the S&P 500. It has been argued that indexing has been responsible for stocks in this index going up more than the rest of the market. Do you agree?

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Indexing is a passive investment strategy to construct a portfolio. I agree with the statement as, in recent years, stocks have increased sharply right after they are accepted by the S&P 500. Although there is a short-term effect of indexing on stocks, it influences the ease of the stock market. Moreover, to be eligible for an index, stocks should at least have liquidity.

This further contributes to the growth in stocks as opposed to the rest of the market. For example, as it was said in the post when S&P was announced, the stock grew to an average of 7%. As such, it illustrates the positive impact of the S&P on stocks.

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Academic.Tips. (2023) 'Most index funds index the S&P 500. It has been argued that indexing has been responsible for stocks in this index going up more than the rest of the market. Do you agree'. 9 March.

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Academic.Tips. (2023, March 9). Most index funds index the S&P 500. It has been argued that indexing has been responsible for stocks in this index going up more than the rest of the market. Do you agree? https://academic.tips/question/most-index-funds-index-the-sp-500-it-has-been-argued-that-indexing-has-been-responsible-for-stocks-in-this-index-going-up-more-than-the-rest-of-the-market-do-you-agree/

References

Academic.Tips. 2023. "Most index funds index the S&P 500. It has been argued that indexing has been responsible for stocks in this index going up more than the rest of the market. Do you agree?" March 9, 2023. https://academic.tips/question/most-index-funds-index-the-sp-500-it-has-been-argued-that-indexing-has-been-responsible-for-stocks-in-this-index-going-up-more-than-the-rest-of-the-market-do-you-agree/.

1. Academic.Tips. "Most index funds index the S&P 500. It has been argued that indexing has been responsible for stocks in this index going up more than the rest of the market. Do you agree?" March 9, 2023. https://academic.tips/question/most-index-funds-index-the-sp-500-it-has-been-argued-that-indexing-has-been-responsible-for-stocks-in-this-index-going-up-more-than-the-rest-of-the-market-do-you-agree/.

Bibliography

Academic.Tips. "Most index funds index the S&P 500. It has been argued that indexing has been responsible for stocks in this index going up more than the rest of the market. Do you agree?" March 9, 2023. https://academic.tips/question/most-index-funds-index-the-sp-500-it-has-been-argued-that-indexing-has-been-responsible-for-stocks-in-this-index-going-up-more-than-the-rest-of-the-market-do-you-agree/.

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"Most index funds index the S&P 500. It has been argued that indexing has been responsible for stocks in this index going up more than the rest of the market. Do you agree?" Academic.Tips, 9 Mar. 2023, academic.tips/question/most-index-funds-index-the-sp-500-it-has-been-argued-that-indexing-has-been-responsible-for-stocks-in-this-index-going-up-more-than-the-rest-of-the-market-do-you-agree/.

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