**for the right people**.
I know this will cause controversy, but I genuinely believe that if you are a relatively intelligent, but more importantly patient person who is able to contain their emotions, you shouldn't be buying the index.
If index investing makes you happy and feel secure, that's fine BUT you can probably beat that index. I know that goes against common belief, but that's exactly how you beat the index (by being contrarian).
Not by being foolishly contrarian and saying "Google is a terrible company, so I'm shorting" - but by saying, "I own Google and it's down because oil prices are up - but oil prices won't have any impact on Google's long term earnings, so if I wanted to own Google before, I should want to own it even more now." Replace oil prices with inflation, interest rates, or whatever and Google is still going to be growing their earnings at double digit % over the next decade.
That is the contrarian take - maintaining a position based on fundamental value (e.g. earnings) over the long term. The average person is looking for opportunities to trade in and out, always looking for the next opportunity to profit.
That opportunity to profit isn't always guaranteed - but the opportunity to accumulate is. Whether your Google calls/puts expiring this week end in the money or not is always going to be a question you have to ask when that is the strategy you pursue. Every week you have to ask - am I right?
But if you pursue a strategy of long term accumulation, the only question you have to ask is - are 2 shares of Google still worth more than 1? Essentially, does Google earn more than $0 per share?
And the answer is almost always going to be **yes** (unless there's a nuclear war or zombie apocalypse - but even then Google is still probably profiting). So you can be relatively sure that your strategy of accumulation will lead to increased wealth.
That is how people like Warren Buffet think. But he did it with soap and soda companies where 10% EPS growth would be considered a banner year. Now, the largest, most profitable companies with fortresses for balance sheets look at 10% growth as a pretty terrible year. For example, Google is expected to grow earnings at 35% next year, Microsoft at 20-25%, Facebook at 27%. And hopefully I don't have to mention the ridiculous projected EPS growth of Nvidia.
Whether you like these specific companies, I hope this sounds like pretty fundamentally solid investment advice that you would hear from Benjamin Graham - accumulate a portfolio of fundamentally valuable companies (companies who are profitable + growing earnings + solid balance sheets) and rebalance regularly and you will probably outperform the index.
You would think this style of investing based on fundamental value over the long term would be the mainstream, but today, with the gamification of stock trading, being a long term investor **is** being contrarian (or at least it feels like it).