Sunday, December 18, 2005

Smart Indexing

Buffett has famously suggested recently (last annual report/meeting?) that most investors would be better off over time in an index fund. I wonder if he'll endorse some of the smart indexing currently being offered by Powershares and their competitors. If he doesn't, in my opinion he should, because it is smarter. They'll never be able to identify the great business with pricing power that doesn't require capital (think See's Candies -- I myself am surprised by how many professionals don't really get this 'candy conundrum' either, so rare but so desirable -- the anti-tech). A very good summary of what is currently on offer in the smart indexing space is here. I'll continue to go on record about Japan, and recommend the new Japan fund that comes out tomorrow from Powershares. As soon as our stock market turns down the books with silly titles like 'Asian Kings' and 'SuperInnovative Japanese' and 'Hardworking Chinamen' will hit the shelves again, with content as high-minded as the culturally sensitive titles I suggest, just like 1988. I ought to start writing one now...

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