Posts Tagged ‘p500’

Since stock index funds buy the same stocks as the index, won't their prices become artificially inflated?

My understanding of the DOW or S&P500 index funds is that if GE represents say 1% of the S&P500, it will represent 1% of the value of the S&P500 index funds.

Since many people invest in these index funds to represent the market, won’t any company in the index be artificially inflated in price due to heightened demand?

Another way to ask this is: Do companies that join an index experience a bump in share price & do companies that leave experience a drop within a short amount of time?

Thanks!


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Would dollar cost averaging be good for Index funds or stocks ?

I don’t want to time the market. I want to use dollar cost averaging.

Would it be wise to use dollar cost averaging on index funds like s&p500, Dow Jones, etc.

Or would it be better use dollar cost averaging on 3-4 stocks like in GE PFE MSFT (I’m thinking of strong blue chip companies).

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