FYI: Market-capitalization-weighted indexing is a great strategy for many investors. But like any great strategy, it has experienced and will continue to experience periods where it looks like a bad idea. Here, I’ll look at what makes cap-weighting a sensible approach to building a stock portfolio and why its greatest strength can also be its greatest weakness. Given that we’ve lived through a decade-long stretch where cap-weighting has looked and felt brilliant, my hope is that this piece helps prepare disciples of owning the market to sit tight the next time it next looks and feels dimwitted
Regards,
Ted
https://www.morningstar.com/articles/885731/marketcap-weightings-greatest-strength-is-also-its.html
