Index funds cannot go to zero ? Am I right ? e.g. take the S&P 500 ETF index for SPY.
There are 500 stocks in SPY. Should one stock declares bankruptcy or gets de-listed, it is removed from the index fund SPY and a new stock will be added.
So I think even in a bearish market, the price value of SPY or any index funds including Dow Jones, Hengseng, Nekki, etc will never have a price value of zero.
Should any stock(s) in anyone of these index funds goes belly up, the stock(s) just gets removed or de-listed from the index and a new stock will be added.
Am I right ? Or am I missing anything ?
Even if we have the worst case scenario similar or more devastating than the 1929 market crash, the price of any Index Funds cannot go
to zero value.
Please comment and give me your insight.
Thanks in advance
2007-11-26
22:23:09
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5 answers
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asked by
Vash the Stampede
2