The Practical Implications of the Rise of Passive Investing | Mike Green

[@MichaeldeSousaCruz]

Mike Green on Excess Returns, again? 😳🙌 Making the popcorn! Pressing pause on the universe. Pressing play on the pod! Smashing the like button! Taking notes! 📝 One of the best guests every single time without a doubt!

[@paolobernardi6835]

M Green is one of the brightest mind in the field (only discrepancy I have with him is a small back and forth about Roman history where I still stand my ground). No one has explained with more depth and detail the risks associated to passive investing and current market conditions. The only other person who warned about passive (but mostly when he was kicked out and ETF started at Vanguard) was "Jack" Bogle himself. This episode made me subscribe and save the episode.

[@ExcessReturns]

Thanks for watching!

[@gregorybainathsah7284]

Always a joy to have Mike on the pod, thanks guys 🎉

[@ExcessReturns]

Thank you for watching!

[@gingerkilkus]

Sometimes Protecting your capital is much more important than making money. Basically because if you lose your capital, making money is much harder. ''Missing the train'' vs. ''losing your money''. There are a lot of trains, but if your money is gone, it's over.

[@Franklin-gq4si]

Nobody knows anything, you need to create your own process, manage risk and stick to the plan, through thick or thin ,While also continuously learning from mistakes and improving

[@CharlesArthur-fq5sx]

Many overlook that banks are return-driven businesses. I don't trust keeping a large sum in a bank. Instead, I invest with guidance, enjoy the benefits, and save for retirement.

[@williamDonaldson432]

After the '08 financial crisis, I've learned not to trust corporations. Since 2020, I've been investing with a financial advisor and have had no major losses, so I'm not going back to relying solely on banks.

[@foreverlaura-fq4eu]

@@williamDonaldson432 Market behaviour can be complex and unpredictable. Mind if I ask you to recommend this particular coach to whom you have used their services?

[@williamDonaldson432]

The decision on when to pick an Adviser is a very personal one. I take guidance from Annette Marie Holt to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.

[@markgoldstein696]

Mike is brilliant and insightful (and probably right in his diagnosis) but just like shorting if your timing is off your portfolio/returns will suffer even if you end up being right 15 years later.

[@Sanchyfab]

I would avoid the index funds, mutual funds, or specific stocks for the time being. The 5% fixed incomes are the safest bet for now. Save your cash for when the market actually shows sign of recovery

[@Sanchyfab]

Vanguard VTI. You can count on a net 9% with a reasonable standard deviation of 15 to 17%. Start early, be consistent and the miracle of compound growth will take over. Use time as the real basis of growth...it takes about 5 years.

[@V.stones]

yeah that's a good path, focus on a good strategy, relax back and watch it compound within the years. In good time you'll see returns.

[@V.stones]

It's crucial for individuals to diversify their portfolios, seek professional financial advice, and stay informed about market trends to navigate these challenges effectively.

[@camela8445Mar]

Yeah the strategies are quite rigorous for the regular-Joe. As a matter of fact, they are mostly successfully carried out by pros who have had a great deal of skills and knowledge

[@camela8445Mar]

Sure, but the problem is that most don't have the knowledge needed to succeed in a challenging market. Only highly qualified professionals who had to experience the 2008 financial crisis could hope to earn a high salary in these challenging conditions.

[@somethingclever1234]

Excellent interview

[@ExcessReturns]

Thank you!

[@Dandy852]

Love this guy

[@soundsnags2001]

What do you love about him?

[@philippusparacelsus4136]

This guy is bloody smart

[@Raniyanhunter]

As an investing enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?.

[@garnold-l5p]

If you are thinking of investing in the stock market and you are not well versed, its advisable to work with a financial advisor who is an expert to guide you through the process. this way you could make more profit with less risk

[@Mlanderos-t9e]

A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.

[@Anessa-gibson]

this is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation

[@Mlanderos-t9e]

Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Teresa L. Athas’’ for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.

[@Anessa-gibson]

Thank you so much for the suggestion! I really needed it. I looked her up on Google and explored her website; she has an impressive background in investments. I've sent her an email, and I hope to hear back from her soon!

[@curinderwin]

I am of the opinion that the era of Passive Investing is coming to an end and we will be in an era of new active investing. What will likely play out of that people will want to pile into more-actively managed funds and ironically do so passively.

[@michalsladek8809]

not happening any time soon if ever

[@filmadekho2630]

And what do you think an sp500 etf is ? It’s actively managed by someone else other than you the investor.

[@michalsladek8809]

@@filmadekho2630 …passive investing is not just about SP500 etf. And If you choose to invest just into it you are deciding to ignore roughly 40 % of total market. Which is itself far far more active than proces how SP500 is created.

[@kippsguitar6539]

Opinion based on tealeaves

[@denicesilva9962]

Said the Investment Advisor

[@sammymckay9218]

Okay Mike, I gotta call you out on this. What in the hell are you talking about in regards to Commodities? 1. You say they occupy less of our mental daily life. How is that relevant in any possible way to their significance to our daily life? The fact that it occupies less mental space for most people has no bearing whatsoever on the place of Commodities in our economy. Energy literally is GDP, it is the economy. Same goes for copper. They are and will forever remain essential. So the notion that somehow because the mental occupancy is low for everyday Joe's on sourcing their Commodities or sourcing their energy makes them a poor investment makes no sense whatsoever. It's a complete non-sequitur. 2. You say Commodities are going to play less of a role going into the future as scarce assets. Okay Mike, when it comes to energy and innovation, it is additive. Jevons paradox is one way to put it, that with innovation and new forms of energy, demand simply continues to rise despite the innovation, because demand for energy is theoretically infinite. But the same goes for base Commodities, because they are essential or that innovation, for new technology. 3. We are literally on the precipice of the ai revolution, which will demand exponentially more energy, infrastructure, base metals etc. To say that scarcity is going to matter less in the future at this moment seems to me to be one of the worst calls I've ever heard. Barring a depression. When Commodities are scarce, guess what, people notice theyre paying more for electricity, for housing, for food, for fuel, for lumber, for Fertilizer, etc. All of the necessities for people to have the life of a 1st world country citizen depend upon a balance between supply and demand. If supply were to decrease for Commodities, you bet people will notice they're paying more. I can't believe what I'm hearing.

[@MichaelGreen-ProfPlum]

Sounds like you’re talking your book

[@emcardleinvest]

Important conversation

[@carolynrose1816]

As a passive investor, is it wise to buy market tracking index funds and ETFs from companies like Blackrock, Vanguard and State Street, even when they're at all time highs? I want to invest around 400k in view of retirement.

[@AGNESCHANG-u9h]

Index Funds & ETFs: 40-50%, Emerging Markets (e.g., VWO): 10-15%, Dividend Stocks: 10-20%, Growth Stocks/Small-Caps: 10-20%, REITs: 5-10%. Remember to engage guidance so as to aid proper allocations.

[@sledgeyyyyy]

These funds offer diversification, low fees, and long-term growth potential. Given the significant amount you plan to invest, consulting with a financial advisor can provide personalized guidance tailored to your specific situation and retirement goals.

[@JordanReam8186]

Great advice here. Keep it simple, buy things you understand, take some risk but don't try to shoot the lights out. I currently have 75% SCHD and 25% ROTH IRA. Brokerage account is 40% VOO, 35% SCHD, 25% XLK. Combine balance ~$3.3m Less than 6 years until retirement.... I have about 400k in cash. My portfolio has yielded far more than I expected for my retirement. Kudos to my advisor.

[@BBmbr89]

@@JordanReam8186 Well it seems like a lot of your interest is riding on your source, I could really get well accustomed to your viewpoint, get me involved.

[@LuvmeRos]

Well it seems like a lot of your interest is riding on your source, I could really get well accustomed to your viewpoint, get me involved.

[@johnCoy-u1w]

My portfolio doesn’t just cater to dividend stocks. I hold $VFIAX (S&P 500 index fund) in my Roth IRA and $VTI (Total Stock Market ETF) in my taxable brokerage account. Two of my largest holdings. The individual dividend stock positions all complement the index holdings.

[@William-y1d-l5c]

There are many other interesting stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire.

[@Kecia-f6k]

When it comes to investment, diversification is key. That is why I have my interests set on key sectors based on performance and projected growth. They range from the EV sector, renewable energy, Tech and Health (AMD) alongside coins, and gold. I'm also working on an investment plan with my Fin. Advisor that includes AI looking into Nvidia, MSFT, Alphabet stocks among others. I've been utilising a financial advisor for more than 15 months now, and I've made over $800,000.

[@Nancy-1w]

I actually subscribed for a few trading courses but it didn't help much, been getting suggestions to use a proper financial advisor, how did you go about touching base with your coach?

[@Kecia-f6k]

Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Kathie Daisy Bosco’’ for about two years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.

[@Nancy-1w]

Thank you for this tip , I must say Kathie, appears to be quite knowledgeable. After coming across her webpage, I thoroughly went through her resume, and I must say, it was quite impressive. I reached out to her, and I have booked a session with her.

[@motley331]

The carnage when this most over-priced market (in history) implodes is going to be exquisite.

[@bellakrinkle9381]

True, but how far from now? 2030?

[@rokyericksonroks]

Dry kindling continues to be brought out to the fiscal bonfire that firestarter Powell ignited in September. Inflation will likely burn everything to the ground before anybody at the Fed acknowledges what they have done.

[@bellakrinkle9381]

I've been contemplating this idea.

[@jamesmorris913]

As Bill Bernstein says, "As long as there are two dentists meeting regularly for lunch in Lubbock, Texas; the stock market will NEVER be 100% indexed".

[@rokyericksonroks]

Somebody has to set prices. I don’t recommend dentists for such a task but where does price discovery come from except active traders?

[@HepCatJack]

To Jack's comment. I think that looking at volume in dollars is a flawed approach, looking at it in terms of number of shares would be better. BRK.A shares cost 690K a piece most people can't purchase one share. NVR share 9.4K so this would price many investors from purchasing shares unless their broker can handle orders for fractional shares. This would have a considerable effect on liquidity. A seller would only have offers from wealthy buyers.

[@johns4412]

Brilliant

[@ExcessReturns]

Thank you!

[@UNDERDOG18UNDERDOG18]

BRK is awesome. I have bought and held for 20 years!

[@prat-man]

Awesome 👍🏻

[@LadyF71]

22:23 Good question

[@HedgeFundOfOne]

The one about her cackle was pretty good. Maya has her nailed flat. 😂

[@WhaleEye-r4e]

FWIW, the Harry Browne Permanent Portfolio concept did not actually have a broad commodity basket. As he espoused it back in the '80s and '90s it was 25% stocks, 25% bonds, 25% gold, and 25% cash.

[@rokyericksonroks]

Fair enough but Browne never lived in the age of cryptocurrency.

[@WhaleEye-r4e]

@@rokyericksonroks Yes, I agree that Bitcoin likely has a role now-a-days. I was just correcting the record because in the video Mike Green incorrectly re-counted the Harry Browne portfolio.

[@sammymckay9218]

I'd love to see some charts corroborating this idea of passive investing.

[@MeJonTheDon]

What happens to those passive inflows during a downturn? Are they stopping and that causes the downturn effectively, or do people actually withdraw a significant amount that has a negative leverage effect?

[@ogp12]

We’d have to be more specific , generally working people contribute and retirees withdraw. A downturn in employment would reduce inflows and perhaps increase outflows. Demographics (overall aging) has the same effect over time. Now, if there is a downturn in the market , panic might accelerate withdrawals, the second dynamic you described

[@michaeloconnor6683]

Mike has to talk to these 2 guys like they are in the 3rd grade

[@kippsguitar6539]

He doesn't have to buy he does because he's condescending

[@superkebabi]

Speaking succinctly and without jargon doesn’t mean he thinks the hosts are dumb or intends to condescend.

[@agilejro]

He operates 2x 3x a normal investment mind, he understands that he should talk to people so they can understand. It's not condescending to check back in with the viewer either; he spoke very well.

[@kippsguitar6539]

@@agilejro he's very condescending though

[@ogp12]

The scam bots have become so nice and pleasant in their comments 😄

[@rjlane3475]

if Mike’s holdings within FIG are any indication of Mike’s true feelings about the future of markets, he’s just as confused as the rest of us

[@kippsguitar6539]

All the portfolio managers tell you passive investing won't work because it's their business to

[@pioneer7777777]

I wonder how things like non SP500 indexes are affected. Like what about SCHD or others that only has a 7% weighted overlap. I doubt any workplace offers that as an option.

[@sethmiller5414]

No one sees the irony or conflict of listening to this guy? He sells ETFs for a living -- of course he wants you to invest in products (like he sells) / be passive until the system breaks. Totally trustworthy source.....

[@billykotsos4642]

SnP 500 is free money. US state will NEVER let the stock market crash

[@mjcruiser4238]

Plenty of single stock risk -ie Crowdstrike

[@kippsguitar6539]

What risk? It's on tear after a minor bump

[@thomassteeley9734]

The Fed is responsible for this purported problem. Stop saving speculators, stop too big to fail, and this issue melts away. Also, as Mike points out, buying the S&P 500 index, which has become synonymous with passive, is decidedly not passive. Price agnostic buyers are simply piling into past performance. Outside the Fed or Treasury continually backstopping the strategy will fail.

[@dunesmom7990]

If you bought Monster Beverage from 1999 to 2009, return was over 5000 %. I guess that’s why they say it’s a stock picker’s decade.

[@nightshiftblues]

I like this guy BUT I can’t help but feel that passive investors - through pension pots - offer the market stability and a regular injection of capital. And that a doomsday rush to withdraw their passive investment is unlikely, most of my colleagues rarely even check the progress of their pension funds. In fact, many don’t even register to check their funds online.

[@JunkSock]

Derivatives of the market indexes…

[@haren1996]

What if instead of using free float to calculate market cap, you used only the shares owned by insiders to calculate market cap? So the opposite in other words.

[@doug2731]

So sick of Mike Green's endless apocalyptic takes over index funds. We get it. The only way to raise attention is to stir the pot and make bold doomsday claims over and over and over again until they finally happen and everyone calls you a genius. Tired of this trend in content and social media.

[@1980brew]

1000%. and he is very arrogant about it, as if he knows something that nobody else in the market is paying attention to.

[@stiffeification]

Or they never play out. Enough very high profile academics claiming the opposite to Green.

[@b3746]

It's like Peter Schiff and Dr.Doom script. Keep saying the same thing eventually you will be right

[@matthewolson7404]

I'd be careful thinking he's being "bold", this hardly seems to have anything to do with courage, it's a hard concept to truly grasp I don't blame you. Is it probable to say sone time in the future our need to convert more stock to cash is likely? If so, at what point does it matter if at all to everyone invested if the fund's just keep selling off?

[@mohr4less]

What trend? I have heard zero people outside of Mike Green make this assessment… at least not to anywhere near the degree he does. I’m not saying he’s right. But he’s not really a doomer in any traditional sense.

[@johnliebenthal]

Passive investing is about to die big time.

[@astrogumbo]

did you choose the right hedges did you choose the right strikes etc me nope hahaha

[@lustgarten]

get a light . your face is in shadow. Show you're a pro. or simply move to the back of the room where the light is. You owe it to your viewers to care.

[@smk2214]

Jack should get headphones, too. The audio issues were distracting, and it is not the first time they've happened on this channel. Mike's voice kept getting cut cus Jack's mic was activated from time to time.

[@bolti1976]

"System breaks". Such crap. The stock market will collapse. Nothing else will happen. This guy will make you all reliant on food stamps soon.

[@ogp12]

When a majority of people use the financial markets as a retirement vehicle, and then the financial markets seize up, it is a system break

[@bolti1976]

@@ogp12 People thought the same in 1999 and 2007.

[@ogp12]

@@bolti1976 doesn’t mean they are wrong. If you were to play Russian roulette (to borrow Nassim Taleb’s analogy) and every time you pull the trigger you double your savings but there is a real bullet in the barrel, how many times would you play? Would you think, ‘well the last two times I didn’t die’

[@bolti1976]

@@ogp12 Just stay Long and stfu. Think of me.

[@ogp12]

@@bolti1976 the champagne of winning an argument 🙏

[@jamesmorris913]

Okay, great. So..who the hell is MIKE GREEN? I went to High School with a guy with the same name..but he's a different guy. BTW..if THIS Mike Green is an active money-manager, any credibility he has on the topic, just flew right out the window!

[@KishoreDuddekunta]

Doomer😂