To observe this wave movement, look at the page in Investors Business Daily newspaper with the three indexes displayed together. This suggests that as money flows in and out of the market, this movement dictates our chance for success. So we believe you should be sensitive to where the markets are relative to those moving averages. Even though we each like to think we're extra brilliant, we can tell you it is the flow of the market more than anything else that dictates the size of the opportunity you have before you. The second portion of the equation is the type of stocks that are moving.
Indexing is popular for several reasons.
Another reason for popularity is that since there is so much money chasing so few stocks, money managers need the liquidity provided by the large-capitalization stocks. You should know that this type of alignment by institutions has occurred during other market cycles. At the beginning of this great bull market in the early 80's, the market was dominated by value investors in large-cap stocks. In the 90's we find growth investors having the upper hand in large-cap stocks. What we have learned over the years is worth your thinking about.