Mark Hulbert of the New York Times revisits the indexing debate, by pointing to the results of a long-term study by The Hulbert Financial Digest tracking the performance of newsletter recommendations and the S&P index. Fewer than one in seven was able to beat the S&P over the 26 years of the study. But there's another element that must be considered, and that's the psychological stamina of individual investors:

This psychological dimension is crucial in interpreting long-term performance. In the usual pattern, buying and holding an index fund becomes a widely popular strategy during long bull markets At such times, many investors find it much better — and more predictable — than trying to determine either the market's short-term gyrations or which individual stocks will outperform others. By the bottom of the subsequent bear market, however, most of those converts to buy-and-hold index fund investing will have thrown in the towel, unable to tolerate the pain of pursuing it over the long term.

Read this post on the Blogger mirror -- Reader comments often appear there that won't show up on this page. You can leave comments on either page, I'll read 'em all!mortgage calculator