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Why don't we all just go invest in index funds? That's a very good question. The best answer might be: for the greater good. It's hard to be too altruistic when it comes to making money, but this might be one of the few cases where it makes sense.

The reason the market is so efficient is because investors are constantly looking for inefficiencies in it, capitalizing on new information, to turn a profit.

Why should stock prices be lower on Monday than other days of the week? Well it's probable that they use to be, and that represents an inefficiency. When this was discovered, people bought more stocks on Mondays, driving up prices, thereby getting rid of this effect. If they were all just investing in a mutual fund, this effect may have gone unnoticed for a lot longer. Investors do a huge amount of research to try to suss out the future earnings of investments they're interested in. If someone could predict the weather this winter, they'd have a better idea about a lot of investments, from oil to coats. So they think long and hard about a lot of issues and use this to make the economy stronger by putting money where it should be, instead of in losing propositions. So this all makes the economy stronger. Of course speculation has downsides as well, like the way the price of oil jumps around, so maybe there's a bit too much of this going on.

So don't feel too guilty about just investing Vanguard low-cost S&P 500 index fund. But remember that the economy would suffer if everyone did this.

Also if you pick stocks yourself, and you try hard to minimize your risk, then your average should be very close, statistically speaking, to that of the S&P 500. So if you enjoy being in control of your own destiny, then this is a way to go. Reducing volatility is the key here. Perhaps you can see why don't we all just go invest in index funds and are ready to download our free stock software for comparing stocks.