I wanted to do a simple (I thought) exercise in determining how a portfolio which was comprised of the Dow 30 at various points in history would have performed comparable to an ETF which tracks the Dow. However, I quickly realized this would be extremely difficult because even just 30 years ago a large portion of these companies are either bankrupt, have been absorbed, or have split into multiple companies.
Now that would lead me to believe that if you bought and held these stocks over 30 years you would have performed naturally much worse, but I can't prove it.
Therefore I have two questions:
Has anyone attempted to show the return differences between buying individual index components vs shares of an ETF which tracks them? And in that, what were the exact findings in a stock by stock detail?
And two, if the findings are that it does, as I assume, perform worse, does that directly contradict the theory that the stock market always gains over time, and should be rephrased to INDEXES always gain over time? The interest I have being if you bought the largest 50 or so companies in 1900, 1910, 1920, etc, is it entirely possible that instead of being a millionaire/billionaire like many would expect, is it possible that you could actually be flat broke?
Submitted August 17, 2017 at 06:40PM by blurryk http://ift.tt/2vNolys
