...there are at least two good opportunities to profit from change: First, assessing the impact of change isn't always easy, so there are always opportunities to gain from a better research and analysis process. Put differently, experience and skillful analysis help. Second, and perhaps even more important, index investors are always there to help us. When the outlook for a particular company improves due to changes in the economy, we need other investors who are not guided by the company's economic outlook to sell the shares we want to buy. Correspondingly, when we want to sell a company's stock because its outlook has turned less favorable, we need investors not guided by economic sense to buy the shares we want to sell. In a nutshell, those are indexers--since they buy , sell or hold stocks based merely on the makeup of various stock indexes. Especially during times of significant change, index funds have no ability whatsoever to change in response to a changing environment.
Dec 2016