The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Zikzin on March 19, 2017, 09:21:22 AM
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Watched it last night and I can't stop thinking about it especially knowing that these lobbyists are still in office. I only have one question though:
Does this affect Vanguard or VTSAX at all? I mean are some of these crappy funds mixed in with the good funds in these indexes?
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I haven't seen "Inside Job" but wanted to correct one bit of terminology. The S&P 500 index fund holds ~510 stocks. It holds no other funds, just shares of companies that are publicly traded. And these are also the largest public companies in the United States - ones that are watched closely by many people, and aren't easy to manipulate the price without it being noticed and investors suing those responsible.
In times past people gamed the S&P 500 index by purchasing the 501st stock, so over the years Vanguard learned to adapt by purchasing the 501-510 stocks early and waiting. Vanguard also uses derivatives to simulate 100% investments while keeping some available cash for expenses and withdrawals.