The wisdom of investing in Charlie Munger: S& P 500 Index is not defeated.

Late Charlie MongerA famous investor and vice -chairman Berkshire Hathaway BRKOnce they confirm that 95 % of investors have no chance to outperform the S&P 500 index.

What happenedDuring the interaction a few years ago, Monger shared his ideas about the challenges facing investors in trying to outperform the market. Monger, who passed away in 2023, was a close partner Warren BuffettHis advice is still of high value in the investment world.

Monger has acknowledged the dominance of index funds such as the S&P 500, which represents a large part of the market.

he to caution In exchange for the risks of excessive popularity in investment, the index investment, attracting aspects of symmetry to the elegant fiftieth era, as the narrow focus on a selection of stocks led to the conditions of the unclean market and subsequent contraction.

“95 % of people have no chance to overcome the S&P 500.

He added: “If you get a lot of vote in one sector or in a single narrow index, of course you can get catastrophic changes as was the case with NIFTY 50 in that previous era.” “I don’t see this happening when the index is three quarters of the entire market. The problem is that the whole thing cannot work forever, but it will work for a long time.”

Also read: The financial success of Charley Monger and the advice of longevity: “My game in life has always been to avoid all the standards of failure.”

“One of the reasons why you buy a large index like the S&P is that if you bought a small index and get popular, you have a position that defeats itself. When 50 NIFTY was anger, Jp Morgan Everyone spoke to buy only 50 shares and did not care about the price. They bought these fifty shares. Of course, in time, they forced their purchase on these fifty to 60 times of profits when they outbreak and everything like two -thirds quickly quickly. ”

“I would like to hate a trillion dollar administration in large stocks and try to overcome indexes. I don’t think I can do so. In fact, if I looked at Berkshire, I made a hundred decisions, which is like two years per year, Berkshire’s success came from two annual decisions over 50 years,” Monger continued to talk about S&P.

As the index’s investment gained popularity, Munger noticed a declining trend in large portfolio management fees. Highlights the challenges facing investment professionals who should adapt to the changing scene where the fee structures are increasingly competitive.

“We may have overcome the indexes, but we did not do this by obtaining a large stock of securities and the presence of sub -sections that manage drugs and sub -divisions, and therefore indexes are a problem with you, but you know, why should life be difficult?” He said.

Why do it matterMunger’s visions of the tremendous challenges inherent in trying to overcome the S&P 500 index. While index boxes offer benefits such as diversification and cost effectiveness, they also offer obstacles to investors who seek to outperform the market.

The increase in investment in the index led to a competitive environment for fees, which prompted pressure on investment specialists to adapt and innovate.

Read after that

Charlie Monger’s three lessons: “Buying great companies at fair prices, the big money is not in buying or selling-they are waiting, good companies are moral companies.”