In my opinion, it is all a matter of market timing. It does not matter if it is gold, oil, or Microsoft, if you have access to good market timing signals, they will help you get in and out at a profit.

No guarantees in this business, but if they are right most of the time, you can still make $s.

There are may web sites providing them out there (search Google). Just find one that works and use it! Check out http://invetrics.com as an example.

Its Dow Jones timing signals are up 44.7% as of 6/24/09 while the Dow is up just 26% off its March lows.

Following a market timing system works!

The reason that Fidelity and Schwab’s index funds carry such low costs is because of a “fee waiver” that’s outlined in the prospectus. In other words, as you hypothesized, they really are running those funds for less than it costs them.

The catch is that, as outlined in the prospectuses, they’re allowed to eliminate the fee waiver at any point in time. As an example, Schwab’s fund that tracks the Wilshire 5000 would have an expense ratio of 0.38% (rather than the publicized 0.09%) if they were they were to eliminate the waiver.

So if you go with anything other than Vanguard, you’re on the hook for having to continually check to make sure the waiver is still in place.