50 years of "A Random Walk Down Wall Street"

[GoSeigen]

I am not saying it is wrong, in my view it is sub-optimal. Using price as an input into allocation will always be flawed because it is mostly noise.
It is better, in my view, to determine portfolio weights using a fundamental factor and then populate it according to price.

Which fundamental factor?

TJH

Wow, you've been reading his posts for 15 years or more and still don't know the answer to this question? He gave it just up the thread there. Do catch up!

to have no exposure to the S&P500 for the past 20 years is nothing short of criminal IMO.

I've been SHORT the S&P most of that time. LOL. 20-year CAGR is still c13.5%.

GS

[dealtn]

However, what frustrates me about the HYP approach is that it’s a terrible method for younger investors looking to build their wealth through equity investments. This seems to be the point Lootman is making. No-one under 60 should be investing purely based on dividend yields IMHO, especially if they are still working. However, I appreciate it may work well for old people who already have wealth.

All the best, Si

You have to bear in mind that, for some considerable time, using higher yield shares gave a better total return than using low yield shares. Just look at the comparison between the FTSE350 HY and FTSE350LY TR indices.

Yes let's look!

Starting in 1999, up until 2022, there have been 23 years you could have invested in either index and patiently waited whilst observing which of those indices has delivered the better Total Return.

High Yield "wins" in just 5 of those long run observation periods, against a victorious Low Yield in the other 18.

Can we stop promulgating nonsense of a highly selective nature to win this debate. There will be periods you can select where either approach has proven better. Your claim can't sit unchallenged.

[simoan]

However, what frustrates me about the HYP approach is that it’s a terrible method for younger investors looking to build their wealth through equity investments. This seems to be the point Lootman is making. No-one under 60 should be investing purely based on dividend yields IMHO, especially if they are still working. However, I appreciate it may work well for old people who already have wealth.

All the best, Si

You have to bear in mind that, for some considerable time, using higher yield shares gave a better total return than using low yield shares. Just look at the comparison between the FTSE350 HY and FTSE350LY TR indices.

Yes let's look!

Starting in 1999, up until 2022, there have been 23 years you could have invested in either index and patiently waited whilst observing which of those indices has delivered the better Total Return.

High Yield "wins" in just 5 of those long run observation periods, against a victorious Low Yield in the other 18.

Can we stop promulgating nonsense of a highly selective nature to win this debate. There will be periods you can select where either approach has proven better. Your claim can't sit unchallenged.

I would also point out that the FTSE250 is a complete joke of an index dominated by financials, the majority of which are Investment Trusts and Infrastructure funds. No-one should be using it to benchmark anything.

[AWOL]

50 Years Later, Burton Malkiel Hasn’t Changed His Views on Indexing

The author of the classic ‘A Random Walk Down Wall Street’ still believes the markets are hard for any individual to beat

.....WSJ: Let’s talk about the social cost of indexing. Indexing succeeds by free-riding on the costly research and price-finding activities of active investors. What if everybody did it? Would we even have a stock market? How would we allocate capital? Doesn’t indexing reward mediocrity and excellence equally?

DR. MALKIEL: We don’t have too much indexing; we have too much active management. I think the market could function fine with just 2% or 3% of investors being active and making sure that information was reflected properly in prices......

Even if that were true, there would surely be a problem of liquidity with many shares and so the prices could not and would not properly reflect all the available information. Index funds rely on an active market. I see indexing as a perfectly legal although somewhat selfish activity or rather, non activity.

Dod

If the least skilled investors and managers went passive then the market should become more efficient. On the hand If price discovery suffered then the opportunity for active management should improve and the flows would follow. I would expect this to stabilise around an optimum balance between active and passive.

So it isn't selfish for unskilled investors to go passive. In fact perhaps it's selfish for those that cannot outperform after costs to continue. Personally i wouldn't rush to moral judgement.

[Dod101]

50 Years Later, Burton Malkiel Hasn’t Changed His Views on Indexing

The author of the classic ‘A Random Walk Down Wall Street’ still believes the markets are hard for any individual to beat

.....WSJ: Let’s talk about the social cost of indexing. Indexing succeeds by free-riding on the costly research and price-finding activities of active investors. What if everybody did it? Would we even have a stock market? How would we allocate capital? Doesn’t indexing reward mediocrity and excellence equally?

DR. MALKIEL: We don’t have too much indexing; we have too much active management. I think the market could function fine with just 2% or 3% of investors being active and making sure that information was reflected properly in prices......

Even if that were true, there would surely be a problem of liquidity with many shares and so the prices could not and would not properly reflect all the available information. Index funds rely on an active market. I see indexing as a perfectly legal although somewhat selfish activity or rather, non activity.

Dod

If the least skilled investors and managers went passive then the market should become more efficient. On the hand If price discovery suffered then the opportunity for active management should improve and the flows would follow. I would expect this to stabilise around an optimum balance between active and passive.

So it isn't selfish for unskilled investors to go passive. In fact perhaps it's selfish for those that cannot outperform after costs to continue. Personally i wouldn't rush to moral judgement.

Indeed. It was not intended to be a moral judgement but I agree that that follows from the use of the word. It is the wrong word but passive funds are piggy backing on the judgement of active investors. If there were no active investors it is difficult to see how there could be meaningful passive investors/funds.

Dod

[OhNoNotimAgain]

I've been SHORT the S&P most of that time. LOL. 20-year CAGR is still c13.5%.

GS

That is less to do with earnings and almost all down to QE to ZIRP. My guess is that cryptos and Knightsbridge property would have delivered similar returns.

Voters are not allowed to feel poor any more so CBs and governments do everything they can to promote fairy tale economics.

[Itsallaguess]

I am not aware of a single successful long term investor who built wealth using a high yield only investment approach, let alone one artificially restricting itself to UK large caps.

Sorry to have to point this out for you Si, but aren't you talking to one?

I’m talking about a much lauded fund manager or a widely renowned investor in the public domain. I don’t know one.

If you mean TJH, then yes, well done because he met his own low investment goals, but he’d better not look at a long term chart of the S&P500.

I'm still never quite sure why a particular individual's successful investment strategy might continue to be completely invalidated by your continued insistence on 'whataboutery'.

You've said you don't know of a single successful long term investor who's built his wealth using a high yield only investment approach, and when it was pointed out to you that you were actually stood next to one, your reply is that 'he doesn't count'...

I'm sorry, but that's the logic of someone who cares more about being right than ever trying to form any sort of coherent argument Si...

Cheers,

Itsallaguess

[simoan]

I'm still never quite sure why a particular individual's successful investment strategy might continue to be completely invalidated by your continued insistence on 'whataboutery'.

You've said you don't know of a single successful long term investor who's built his wealth using a high yield only investment approach, and when it was pointed out to you that you were actually stood next to one, your reply is that 'he doesn't count'...

I'm sorry, but that's the logic of someone who cares more about being right than ever trying to form any sort of coherent argument Si...

Cheers,

Itsallaguess

I'm sorry but as you know I do not follow the HYP board, so I have no idea what the performance has been. As I have made clear, if you start out from a wealthy position, then you can afford to set your sights low. Beating the FTSE100 is like me jumping over a one foot high bar and then declaring myself to have a very good high jump technique.

And then, of course, we need to consider risk adjusted returns. By selecting only 15-20 FTSE100 companies with the highest yields (in itself a sign of risk) then you are obviously taking on higher risk than that of the market itself. Under those circumstances, even if you beat it handsomely you have in risk adjusted terms only done averagely given the risk taken. The trouble is most private investors don't understand risk or even take it into account.

All the best, Si

[Itsallaguess]

I'm still never quite sure why a particular individual's successful investment strategy might continue to be completely invalidated by your continued insistence on 'whataboutery'.

You've said you don't know of a single successful long term investor who's built his wealth using a high yield only investment approach, and when it was pointed out to you that you were actually stood next to one, your reply is that 'he doesn't count'...

I'm sorry, but that's the logic of someone who cares more about being right than ever trying to form any sort of coherent argument Si...

I'm sorry but as you know I do not follow the HYP board, so I have no idea what the performance has been.

Well all I can say is that for someone that 'doesn't follow the HYP board', you seem to have some pretty strong views about the approach, which starts to look like prejudice if you squint a bit, given that it's now admitted to come from a lack of better understanding...

As a well-meant proposal Si, why don't you actually ask Terry what his long term HYP performance has actually been like?

He's well known for having very scrupulous, long-term records, and I honestly think you'd be surprised when you actually see his figures.

Given what from here, I must say, currently looks to be 'selective ignorance' given your above admission, I will watch on as an interested observer to see if you do that, and what your response to seeing those long term records might be, if you don't mind, and then we can perhaps start to dispel those 'selective ignorance' accusations if it looks like you're actually interested in learning of them...

Cheers,

Itsallaguess

[simoan]

I'm still never quite sure why a particular individual's successful investment strategy might continue to be completely invalidated by your continued insistence on 'whataboutery'.

You've said you don't know of a single successful long term investor who's built his wealth using a high yield only investment approach, and when it was pointed out to you that you were actually stood next to one, your reply is that 'he doesn't count'...

I'm sorry, but that's the logic of someone who cares more about being right than ever trying to form any sort of coherent argument Si...

I'm sorry but as you know I do not follow the HYP board, so I have no idea what the performance has been.

Well all I can say is that for someone that 'doesn't follow the HYP board', you seem to have some pretty strong views about the approach, which starts to look like prejudice if you squint a bit, given that it's now admitted to come from a lack of better understanding...

As a well-meant proposal Si, why don't you actually ask Terry what his long term HYP performance has actually been like?

He's well known for having very scrupulous, long-term records, and I honestly think you'd be surprised when you actually see his figures.

Given what from here, I must say, currently looks to be 'selective ignorance' given your above admission, I will watch on as an interested observer to see if you do that, and what your response to seeing those long term records might be, if you don't mind, and then we can perhaps start to dispel those 'selective ignorance' accusations if it looks like you're actually interested in learning of them...

Cheers,

Itsallaguess

If I told you I started a HYP years ago but gave up and have run it as a virtual HYP ever since, would you believe me? I'm well aware of the performance of a bog standard HYP, so please don't accuse me of ignorance. On a risk-adjusted basis it has been blown away by index trackers and just about any decently managed International IT, Fundsmith etc. To have a 100% HYP only investment strategy is bonkers IMHO for anyone, especially people who are trying to grow wealth to achieve FIRE.

[Itsallaguess]

I'm sorry but as you know I do not follow the HYP board, so I have no idea what the performance has been.

Well all I can say is that for someone that 'doesn't follow the HYP board', you seem to have some pretty strong views about the approach, which starts to look like prejudice if you squint a bit, given that it's now admitted to come from a lack of better understanding...

As a well-meant proposal Si, why don't you actually ask Terry what his long term HYP performance has actually been like?

He's well known for having very scrupulous, long-term records, and I honestly think you'd be surprised when you actually see his figures.

Given what from here, I must say, currently looks to be 'selective ignorance' given your above admission, I will watch on as an interested observer to see if you do that, and what your response to seeing those long term records might be, if you don't mind, and then we can perhaps start to dispel those 'selective ignorance' accusations if it looks like you're actually interested in learning of them...

If I told you I started a HYP years ago but gave up and have run it as a virtual HYP ever since, would you believe me?

I'm well aware of the performance of a bog standard HYP, so please don't accuse me of ignorance.

But I'm not talking about your virtual HYP, and I'm not talking about whatever this 'bog standard HYP' is though Si - I'm encouraging you to learn about the long-term performance figures of a HYP owner that you were metaphorically stood next to earlier in the thread, with a very well defined approach to running his HYP, to see if it might alter your earlier quoted position of 'not [being] aware of a single successful long term investor who built wealth using a high yield only investment approach'.

When confronted with someone who has clearly got a vociferous and entrenched opinion about the strategy, and who comes out with quotes like that, where they are then offered with the possibility of actually seeing some clear record-based evidence that might change their view on that particular quote, surely you can expect some push-back when such an offer then seems to be actively avoided, in case it runs the risk of short-circuiting some well-established and heavily entrenched anti-HYP synapses...

Man 1 - 'I've never seen a Zebra in my life'

Man 2 - 'There's one over there, look...'

Man 1 - 'No'

Man 2 - 'Eh?'

Cheers,

Itsallaguess

[simoan]

But I'm not talking about your virtual HYP, and I'm not talking about whatever this 'bog standard HYP' is though Si - I'm encouraging you to learn about the long-term performance figures of a HYP owner that you were metaphorically stood next to earlier in the thread, with a very well defined approach to running his HYP, to see if it might alter your earlier quoted position of 'not [being] aware of a single successful long term investor who built wealth using a high yield only investment approach'.

Your missing the point I am making, maybe wilfully. Other than someone who only posts their results on a bulletin board, who you seem to trust, where is the great fund manager of the High Yield Equity Income world? Why is there no-one who you can point to who follows this path and whose results are excellent and a matter of public record? I always understood why our late, great friend Gengulphus was running a HYP and so never questioned him about it, even though the irony of how he built his wealth was not lost on me. I understood that it was a reasonable approach for someone that was already very wealthy. Any form of income only investing is a terrible way to become wealthy in the first place. I'm not sure why you keep evading this point which is central to my argument?

When confronted with someone who has clearly got a vociferous and entrenched opinion about the strategy, and who comes out with quotes like that, where they are then offered with the possibility of actually seeing some clear record-based evidence that might change their view on that particular quote, surely you can expect some push-back when such an offer then seems to be actively avoided, in case it runs the risk of short-circuiting some well-established and heavily entrenched anti-HYP synapses...

Call me an idiot but I take anything I read on a bulletin board with a sack of salt. I have no interest in posts containing someone's supposed investing results, never have. It's the worst kind of confirmation bias possible and maybe highly misleading to those whose financial position is not the same as the poster.

[OhNoNotimAgain]

Your missing the point I am making, maybe wilfully. Other than someone who only posts their results on a bulletin board, who you seem to trust, where is the great fund manager of the High Yield Equity Income world? Why is there no-one who you can point to who follows this path and whose results are excellent and a matter of public record? ?

Spot on. Terry's performance is presumably gross, i.e. before commission, stamp, custodian and other fees. And he does not tell us what his active share, how much he deviates from the index. As it is only has a limited number of names that figure would indicate just how risky it was. I suspect the answer is; A Lot.

[dealtn]

Your missing the point I am making, maybe wilfully. Other than someone who only posts their results on a bulletin board, who you seem to trust, where is the great fund manager of the High Yield Equity Income world? Why is there no-one who you can point to who follows this path and whose results are excellent and a matter of public record? ?

Spot on. Terry's performance is presumably gross, i.e. before commission, stamp, custodian and other fees. And he does not tell us what his active share, how much he deviates from the index. As it is only has a limited number of names that figure would indicate just how risky it was. I suspect the answer is; A Lot.

To be fair I would be surprised if Terry's numbers didn't include such costs.

I would also point out the difference between "None" and an average. Arguing there are no successful (HYP or whatever) investors isn't likely to be successful. Pointing out they are few, and on average such investors do worse than X, despite the few outliers, is a more likely believable stance.

Confirmation and Selection Bias have a large part to play here though. It isn't surprising to see/hear few contributions from unsuccessful HYP (or other strategy) advocates in this place. Who publicly admits their failings and stupidities willingly?

[Itsallaguess]

I have no interest in posts containing someone's supposed investing results, never have.

Thanks Si - that's exactly what I thought your position was, as someone who earlier in the thread clearly said -

'I am not aware of a single successful long term investor who built wealth using a high yield only investment approach'

If you've now changed those goal-posts to only include 'great fund managers', and point-blankly refuse to even consider looking at the long-term investment results of others on this site, then I'm happy to leave that position on the record for others to perhaps consider when we all no doubt continue to hear your entrenched views on the subject...

Watch out for those Zebras...

Cheers,

Itsallaguess

[tjh290633]

Your missing the point I am making, maybe wilfully. Other than someone who only posts their results on a bulletin board, who you seem to trust, where is the great fund manager of the High Yield Equity Income world? Why is there no-one who you can point to who follows this path and whose results are excellent and a matter of public record? ?

Spot on. Terry's performance is presumably gross, i.e. before commission, stamp, custodian and other fees. And he does not tell us what his active share, how much he deviates from the index. As it is only has a limited number of names that figure would indicate just how risky it was. I suspect the answer is; A Lot.

I can assure you that my results include all, costs, platform feed, brokerage and stamp duty. What is "His active share"? I do report how my unitised price compares with the FTSE100, which is the most relevant index. For the avoidance of doubt, here is the data:

* Income unit value.

Year-end   Value*  FTSE       FTSE Rel   Year   Ratio  
Dec-87      0.88   1,717.00       0.88      1    99.78%
Dec-88      1.00   1,773.70       0.91      2   109.82%
Dec-89      1.28   2,367.00       1.21      3   105.50%
Dec-90      1.25   2,167.80       1.11      4   112.59%
Dec-91      1.37   2,418.70       1.24      5   110.17%
Dec-92      1.54   2,846.50       1.46      6   105.48%
Dec-93      1.87   3,396.50       1.74      7   107.54%
Dec-94      1.72   3,083.40       1.58      8   108.72%
Dec-95      2.01   3,687.90       1.89      9   106.37%
Dec-96      2.16   4,092.50       2.10     10   102.82%
Dec-97      2.97   5,132.30       2.63     11   112.98%
Dec-98      3.51   5,882.60       3.02     12   116.15%
Dec-99      3.95   6,930.20       3.56     13   111.13%
Dec-00      3.72   6,179.90       3.17     14   117.27%
Dec-01      3.43   5,217.40       2.68     15   128.17%
Dec-02      2.68   3,940.40       2.02     16   132.80%
Dec-03      3.09   4,476.90       2.30     17   134.60%
Dec-04      3.52   4,814.30       2.47     18   142.47%
Dec-05      4.27   5,618.80       2.88     19   148.29%
Dec-06      5.16   6,220.80       3.19     20   161.73%
Dec-07      4.83   6,456.90       3.31     21   145.74%
Dec-08      2.79   4,434.17       2.27     22   122.55%
Dec-09      3.71   5,412.88       2.78     23   133.61%
Dec-10      4.06   5,899.94       3.03     24   134.05%
Dec-11      4.30   5,572.28       2.86     25   150.13%
Dec-12      4.73   5,897.81       3.03     26   156.30%
Dec-13      5.61   6,749.09       3.46     27   161.97%
Dec-14      5.55   6,566.09       3.37     28   164.74%
Dec-15      5.61   6,242.32       3.20     29   175.26%
Dec-16      6.12   7,142.83       3.66     30   166.96%
Dec-17      6.37   7,687.77       3.94     31   161.52%
Dec-18      5.47   6,728.13       3.78     32   144.53%
Dec-19      6.20   7,542.44       3.71     33   167.19%
Dec-20      5.57   6,460.52       3.31     34   168.28%
Dec-21      6.42   7,384.54       3.79     35   169.50%
Nov-22      6.15   7,375.34       3.62     36   169.99%

Does that satisfy you?

TJH

[tjh290633]

You have to bear in mind that, for some considerable time, using higher yield shares gave a better total return than using low yield shares. Just look at the comparison between the FTSE350 HY and FTSE350LY TR indices.

Yes let's look!

Starting in 1999, up until 2022, there have been 23 years you could have invested in either index and patiently waited whilst observing which of those indices has delivered the better Total Return.

High Yield "wins" in just 5 of those long run observation periods, against a victorious Low Yield in the other 18.

I think that you are misleading yourself. You are looking at annual changes, whereas I am looking at the actual numbers. It happens that I have kept copies of some of the tables from the FT, which illustrate my point:

Date        HIX-TR     LIX-TR     Ratio
31-Dec-97   1,851.80   1,789.91    1.03
02-Jan-15   5,411.20   3,451.00    1.57
16-Jun-15   5,521.38   3,761.70    1.47
02-Jan-16   5,115.82   3,707.64    1.38
01-Jun-16   5,278.47   3,697.75    1.43
01-Feb-17   6,353.07   4,016.56    1.58
01-Jun-17   6,775.79   4,448.71    1.52
04-Jun-18   7,226.79   4,816.76    1.50
03-Apr-20   5,230.85   3,828.57    1.37
26-Sep-20   5,072.90   4,751.06    1.07
20-Apr-21   6,448.82   5,047.81    1.28
01-Sep-21   6,953.52   5,794.85    1.20
24-Jan-22   7,587.84   5,687.61    1.33
06-Apr-22   8,015.19   5,522.51    1.45
01-Oct-22   7,478.11   4,826.98    1.55

I am not sure of the date when the TR indices began, but I believe that they started on the same day with the same value (1000). If you look at the data, you will see that, for a LTBH investor, the HY index has been ahead of the LY index all the way. There was a time in 2020 when it nearly overtook the HY index, but in general the HY TR index has been up to 50% ahead and continues to be so.

There are ups and downs in the ratio, but the lead is maintained. I'm sorry that I do not have data for all of the earlier period.

TJH

[mc2fool]

I am not sure of the date when the TR indices began, but I believe that they started on the same day with the same value (1000).

The FTSE 350 HY & LY TR started at 1000.00 on 31.12.1992.

The non-TR 350 HY/LY indices have a base value of 682.94 on 31.12.1985.

viewtopic.php?p=433818#p433818

[MDW1954]

Moderator Message:
This thread is turning into an attack on one particular poster, who as a moderator is poorly placed to respond. While I have some sympathy with the views advanced (eg having S&P 500 exposure, which I've had for many years), some posters have crossed the line into personal attacks, chiefly through the use of pejorative adjectives. This must stop. --MDW1954

[OhNoNotimAgain]

Your missing the point I am making, maybe wilfully. Other than someone who only posts their results on a bulletin board, who you seem to trust, where is the great fund manager of the High Yield Equity Income world? Why is there no-one who you can point to who follows this path and whose results are excellent and a matter of public record? ?

Spot on. Terry's performance is presumably gross, i.e. before commission, stamp, custodian and other fees. And he does not tell us what his active share, how much he deviates from the index. As it is only has a limited number of names that figure would indicate just how risky it was. I suspect the answer is; A Lot.

I can assure you that my results include all, costs, platform feed, brokerage and stamp duty. What is "His active share"? I do report how my unitised price compares with the FTSE100, which is the most relevant index. For the avoidance of doubt, here is the data:

* Income unit value.

Year-end   Value*  FTSE       FTSE Rel   Year   Ratio  
Dec-87      0.88   1,717.00       0.88      1    99.78%
Dec-88      1.00   1,773.70       0.91      2   109.82%
Dec-89      1.28   2,367.00       1.21      3   105.50%
Dec-90      1.25   2,167.80       1.11      4   112.59%
Dec-91      1.37   2,418.70       1.24      5   110.17%
Dec-92      1.54   2,846.50       1.46      6   105.48%
Dec-93      1.87   3,396.50       1.74      7   107.54%
Dec-94      1.72   3,083.40       1.58      8   108.72%
Dec-95      2.01   3,687.90       1.89      9   106.37%
Dec-96      2.16   4,092.50       2.10     10   102.82%
Dec-97      2.97   5,132.30       2.63     11   112.98%
Dec-98      3.51   5,882.60       3.02     12   116.15%
Dec-99      3.95   6,930.20       3.56     13   111.13%
Dec-00      3.72   6,179.90       3.17     14   117.27%
Dec-01      3.43   5,217.40       2.68     15   128.17%
Dec-02      2.68   3,940.40       2.02     16   132.80%
Dec-03      3.09   4,476.90       2.30     17   134.60%
Dec-04      3.52   4,814.30       2.47     18   142.47%
Dec-05      4.27   5,618.80       2.88     19   148.29%
Dec-06      5.16   6,220.80       3.19     20   161.73%
Dec-07      4.83   6,456.90       3.31     21   145.74%
Dec-08      2.79   4,434.17       2.27     22   122.55%
Dec-09      3.71   5,412.88       2.78     23   133.61%
Dec-10      4.06   5,899.94       3.03     24   134.05%
Dec-11      4.30   5,572.28       2.86     25   150.13%
Dec-12      4.73   5,897.81       3.03     26   156.30%
Dec-13      5.61   6,749.09       3.46     27   161.97%
Dec-14      5.55   6,566.09       3.37     28   164.74%
Dec-15      5.61   6,242.32       3.20     29   175.26%
Dec-16      6.12   7,142.83       3.66     30   166.96%
Dec-17      6.37   7,687.77       3.94     31   161.52%
Dec-18      5.47   6,728.13       3.78     32   144.53%
Dec-19      6.20   7,542.44       3.71     33   167.19%
Dec-20      5.57   6,460.52       3.31     34   168.28%
Dec-21      6.42   7,384.54       3.79     35   169.50%
Nov-22      6.15   7,375.34       3.62     36   169.99%

Does that satisfy you?

TJH

Indeed yes Terry, well done.

Active share is a crude measure of how much risk you are taking relative to the index by comparing the the number of holdings and the difference in weights. So an index fund would be 1 and a portfolio that held no stocks in the index being compared would be zero.