Today on the Rational Reminder Podcast we have joining us Dr. David Blitzer who is the Managing Director and Chairman of the S&P Dow Jones index committee. He has been there from the time when indexes were barely even being traded and the first time S&P Futures began trading, and since then, indexing has turned into the massive phenomenon we all know today. Indeed, S&P indexes were (and still is) at the center of this explosion. Today Dr. Blitzer talks to us about the early days of indexing and shares some of his ideas about why indexing became so popular. We also discuss the possible reasons why some people still choose actively managed funds and the effect that the abundance of research has had on their dwindling appeal. Ever wondered where the rapid growth in indexing will end up? What happens after indexing? Can indexing become too big? Be sure to join us for this masterclass on indexing! 

 


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Key Points From This Episode:

  • When Dr. Blitzer joined S&P and how index investing has changed over time. [0:03:33.0]
  • The relationship between an S&P and a product manufactured like Vanguard. [0:06:03.0]
  • Considering the reasons why indexing became so popular and the role of ETFs. [0:10:11.0]
  • How research has impacted people’s perception about active management. [0:12:54.0]
  • Some theories on why it is so difficult to beat the S&P 500. [0:18:13.0]
  • How the change to indexing has affected smaller markets such as Canada. [0:25:39.0]
  • Dr. Blitzer’s thoughts on factor weighting. [0:30:28.0]
  • The line where we cross over from passive to active investing. [0:32:18.0]
  • Can indexing become too big, and what’s next? [0:41:00.0]
  • What Dr. Blitzer ascribes his success to. [0:45:26.0]
  • And much more!

Tweetables:

“The S&P 500 outperformed something like 95% of all the mutual funds in the United States. Shouldn’t happen. It happened because of the technology boom and market cap waiting in the index.” — Dr. Blitzer [0:04:49]

“I used to try and call it intelligent investing. I like that better than passive.” — Dr. Blitzer [0:14:22]

“If you want to make more money you’d better be in the piece of the firm that is growing quickly and the piece of the firm that is not growing that’s, you know, no matter what they say you’re not going to get as big of a raise as when you’re in the fast growing spot.” — Dr. Blitzer [0:46:18]

 

Links From Today’s Episode:

Rational Reminder Website — https://rationalreminder.ca/

Vanguard — https://about.vanguard.com/

BlackRock — https://www.blackrock.com/

State Street Global Advisors — https://www.ssga.com/resources/universal/index.html

Fidelity — https://www.fidelity.com/

Standard & Poor’s — https://www.standardandpoors.com/en_US/web/guest/home

Uber — https://www.uber.com/

Lyft — https://www.lyft.com/

Bill Miller — https://millervalue.com/

Boeing — https://www.boeing.com/

Warren Buffett — https://www.forbes.com/profile/warren-buffett/

Jimmy Carter — https://www.whitehouse.gov/about-the-white-house/presidents/james-carter/

Cboe — https://www.cboe.com/

Goldman Sachs — https://www.goldmansachs.com/

 


Download the transcript of this episode here: Rational Reminder Podcast – EP.54 – Transcript