[fru2013]

Past performance is not indicative of future results.

[21]

Then why do people say "invest in the stock market for the long run by buying an index fund?"

[JumpCrisscross]

> Then why do people say "invest in the stock market for the long run by buying an index fund?"

Because the American economy has historically grown. Buying an index of Austrian stocks on the eve of WWI would have been about as effective as buying cryptocurrencies.

[Retric]

Because of minimizing risk, and minimizing transaction fees.

If you buy 100 stocks and 10 of them go to 0 you are out 10%. However, if the other 90 stocks are up more than 15% then you have gained a little money.

But, if you buy 100 different stocks by hand then you pay 100 different transaction fees and have to keep track of them independently for tax etc.

[GhostVII]

Because over time, stocks tend to increase in value, because you are investing in a company that is producing something of value. You have a reason to believe that stocks will increase in value over a long period of time, other than just historical information.

[cubano]

Because the fees are the lowest and it's been proven over and over again that the number 1 headwind against long-term equity growth is the fee structure.

Index funds require no special knowledge to build...just buy the S&P100 stocks in equal amounts and boom, so the fees for such a fund can be super low.

[gomox]

Amazingly only one of the three replies you got so far understood the point of your comparison.

[SilasX]

Past performance doesn't guarantee similar future results.

If you think it's not indicative, then you're rejecting induction, the cornerstone of learning.