Don't you have on the order of tens of thousands of dollars invested in Intel through retirement savings, though? When S&P 500 companies fail, your retirement savings become worthless. (Apple is really the one you want to watch out for, though!)
Why is my fund in Intel but not in Apple? The whole point of choosing the index is so that you are diversified. You would only lose if Intel lost out to a foreign company, otherwise the demise of Intel is made palatable by the rise of Apple and AMD.
If a major player is massively overvalued, though, then index funds, too, will feel some pain as the exuberance in a major player dissipates.
I hold some INTC directly after having been extremely impressed with the company's dedication to rigorous process in engineering interviews in the mid-2010s. I'm sad to see such a great company go through hard times.
I don't love this; the total stock market is a lot of tech companies, and I already have plenty of exposure to tech by working in the field. It's a good heuristic for most people, though. (And no, I don't do anything about this underlying fear of tech sector exposure. I just buy the Target Date 20XX funds like everyone else.)
My only point is that the grandparent comment generally expects companies to die when they get into the S&P 500. If that's true, we're all screwed. If one S&P 500 is just stealing business from some other S&P 500 company, though, it's probably a net gain. But if it's some privately owned startup, then it's not as concrete a win, and let's be honest, startups are driving a lot of the innovation in tech.
If I had a time machine, I would definitely use it to time the market!
My savings account is not what I'm talking about. Inflation or not, it is still a number I can describe as "positive".
I'm referring to bonds that retirement and wealth management add to funds use to supposedly counter volatility. These are investments that at best will only pay single digits. They have suffered the worst year since 1931 or something. And we're just getting going. The frustrating part is as I said, the underlying bonds themselves still pay that 4% or so which would be much better than the funds are achieving. But for some reason they have to sell the bonds at a loss.
fund managers don't have "personal" or "corporate" assets that are anywhere near the scale of the (retirement) funds they manage; being held responsible for mismanagement would not lead to a source of capital to replace that which had been lost through mismanagement.
All investment has risk.
It seems the person upthread owns a target date fund and this means they probably are diversified. Their post doesn't make a lick of sense.
"When S&P 500 companies fail, your retirement savings become worthless. (Apple is really the one you want to watch out for, though!)"
Companies come and go from it all the time:
https://www.inc.com/ilan-mochari/innosight-sp-500-new-compan...
"Unless you bought inte directly, the rewighting should handle it. Unless it fails quickly and spectacularly"
I would find little comfort in the fact that if Intel goes down 85% -slowly but somewhat spectacularly- from its current level it will eventually be excluded from the index.
The fact that I had to google for the details of its fall gives me comfort that when intels time comes it won’t cause harm on its slow exit.