Index funds

Since John C. Bogle launched ‘index fund’ idea, it has been steadily gaining ground and for many people is now the primary or only way to invest. There is solid evidence it is generally good to investors. But there are also ‘index funds are worse than Marxism’ arguments, papers pinpointing issues with efficient tracking of indexes and the key question - which securities should (selected) index contain and how additions/removals/buybacks/issuances potentially make the index overweight “worse” securities. I think some of that criticism is legitimate, from both results and society point of view. On the other hand, with their scale, they can be very efficient and sophisticated.

But there are also other reasons I don’t just put money into an index fund. The first is that I believe I can beat the market (necessary arrogance of each active investor). The second is that if I understand the underlying value of what I bought, it should be easier for me to stick to it even when the market prices of it keep declining. Having the same confidence in buying more abstract thing like an index fund would be harder for me.

ETF tracking polish stocks (EPOL)

I had bad results in some individual Polish stocks, which at the core were caused by government’s intervention and poor management. Of course the blame of making these bad investment is still on me. My point is that I find it harder to assess Polish businesses, just because many are heavily influenced by government actions, which are rarely shareholder-friendly. And in aggregate, the mid-size, privately-owned businesses are not cheap and can get mismanaged too, with last example being Alma (I actually consider buying Alma, but was put off by the fact it had a controlling insider and some evidence on spending money *on* management).

I still want to have significant exposure to Poland as I will be spending money in PLN and prefer equity to cash/bond investments. So I decided to index into the market, with half of my current position initiated just after brexit and the other half very recently, after significant drop of PLN which caused EPOL to drop as well.

VEUR

I bought VEUR post-brexit as a contrarian move, additionally inclined by weak pound (in which it is denominated). The pound depreciated even further, but the index rose and I have not added to the position since.

I am considering buying VXUS just because of the strength of the dollar, which in my opinion is not sustainable. And I have too much exposure in USD already (almost 100%), which was beneficial until now, but I would prefer to significantly reduce it. But my limit orders are still waiting.