RE: Questions for Sam Beard:"Investor's License"

["Steven H. Johnson" <info@sscommonsense.org>]

re Index-based portfolios

The S&P 500 index is weighted.  Weighting creates problems, as is
being pointed out.  

But the concept of an index-based portfolio does not inherently
involve weighting.  

If Social Security were steering any significant amount of capital
into the stock market, either from the Trust Fund, or in the form
of Personal Retirement Accounts, index-based portfolios would be
a good place for the investments to go.  Social Security cannot
predicate an investment strategy for 150 million people on the idea
that it's going to help everyone beat the market.  All it can do
is base its strategy on the proposition that everyone ought to be
able to realize the market average growth rate, the market average
return rate.  

Given that, there really is no alternative to an index-related 
portfolio strategy.  But it shouldn't pick the S&P 500 as the
reference index.  Something much broader, and less weighted, is
needed.

-Steve.