Index Investing

By the time a recession is officially declared, the economy has usually been in one for the better part of a year — and the market has often already turned. Every instinct that says “wait for confirmation” is calibrated to information that arrives too late to use. Who decides, and how long they take # There’s a rule of thumb — two consecutive quarters of falling GDP — and then there’s the actual process. In the US, the National Bureau of Economic Research’s Business Cycle Dating Committee makes the call, weighing employment, income, industrial production and spending rather than GDP alone.

Most beginner investing advice starts with which fund to buy. That’s the fourth question. Three things come first, and getting them wrong makes the fund choice irrelevant. One: clear debt above about 10% # Paying off a 20% credit card is a guaranteed, tax-free 20% return. Nothing in a brokerage account competes with that, and unlike the market it can’t have a bad decade.

People called the market overvalued in 2012, when the S&P 500 sat around 1,400. It’s near 6,000 now. Being right that something looks expensive and being right about what to do next are completely different skills, and only one of them pays. The honest version of the valuation argument # There’s a real signal in there, so let’s state it fairly.

Pay off the mortgage or invest the spare cash? The answer is almost entirely determined by one number you already know — your interest rate — and the two rules that fall out of it: the lower the rate the more investing wins, and the longer your horizon the more investing wins. The comparison, stated properly # An extra pound toward the mortgage earns you a guaranteed, risk-free, tax-free return equal to your rate. That framing matters. A 6% mortgage paid down is a 6% return with no volatility and no tax drag, which is a genuinely excellent risk-adjusted number.

The top ten stocks now make up 40.8% of the S&P 500 — against 26.6% at the peak of the dot-com bubble. When “the market hit a record high,” what actually happened is that a handful of AI companies had a good day while most of the other 490 went nowhere. The index stopped being a broad measure # Concentration like this is unprecedented. The top ten weighting hit a record 40.7% in 2025 and has stayed there, roughly 50% more concentrated than at the height of the 2000 tech bubble.