While the metals industry is wrestling with indexes and their validity, Wall Street is doing the same. The era of “stock pickers” is rapidly coming to an end, with most investors becoming passive investors by investing mutual funds with a market basket of stocks. Investors don’t want to take the risk of picking a few stocks in hopes they outperform the market. Now, investors want to outperform the stock indices, S&P and Dow Jones, by buying into better performing mutual funds. The mutual funds of course select the stocks that fit a specific category and do the all important weighting, i.e., how much to buy of each stock. However, this is a reduces the risk of picking losers.
This has already been characterized as the ‘do nothing’ revolution. Risk is definitely out even in the equity markets.