If you own an index fund for a long period of time, the trend line tends to be upwards because all index funds rebalance themselves or drop laggards or “losers” and bring in winners. Most individual stock pickers who own more than 10 stocks owns at least one stock which has lost money or is not rising in value, but there is hope. The stock was chosen for a reason and hopefully that reason still exists and maybe the market will find it.

In an article by Chuck Mikolajczak of the Associated Press, on the last Friday of every June the firm which runs the Russell Indexes called FTSE Russell refreshes its indexes. On the stock markets, passive investing or index investing has taken a larger share every year because over the long term it works, however if you need to take money out over the short term, remember markets fluctuate. If you can leave your money in the index will be higher.

At the end of 2020, about $10.6 trillion in investor assets were benchmarked to Russell US indexes – The Russell 2,000 of small cap companies; Russell 1,000 of large cap names; Russell 1000 growth, Russell 2000 value.

Market capitalization for the Russell 3000 index increased from $31.4 trillion in 2020 to $47.7 trillion as of May 2021.

This year the trends include SPAC and meme stocks, the stocks that met the threshold will be included in the new indexes. Goldman Sachs expects 255 additions and 297 deletions at the Russell 3000.

The affect of the rebalancing is volume on the exchange will surge as stocks are bought and sold and rebalanced in the indexes, resulting in the biggest trading volume day on the exchange. Most of the activity happens in the last 15 minutes of trading and the estimated net trade will total $75 billion.

Linking to dividend paying stocks, an index fund over a long period of time will perform very well because the fund will drop losers and pick up winners. The other way to have similar results is buy profitable companies which pay a dividend. While the multiple of the market will go up and down, the dividends ensure your total return remains high and that is a good thing while investing.

There are more questions than answers, till the next time – to raising questions.