The Index Fund/ETF Bubble - How Bad Is It Really?

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The Plain Bagel

The Plain Bagel

Күн бұрын

Пікірлер: 902
@ThePlainBagel
@ThePlainBagel 4 жыл бұрын
Happy Friday! What are your thoughts here? Are we in a bubble or are these claims nothing more than fear mongering? Let me know!
@fernandoorozco149
@fernandoorozco149 4 жыл бұрын
So am I doing wrong if I want to put my money on a 3x leveraged ETF like TQQQ if this ETF is meant to follow the market and it's relatively stable compare to an oil ETF or commodities? I'm starting investing, so with this TQQQ I find diversification with a stable levegeraged gains... Please correct me If I'm wrong.
@FinanceDaily
@FinanceDaily 4 жыл бұрын
The Plain Bagel, hey buddy great video very controversial! I’m putting out a video a little later and I think there is validity in the ETF bubble since ETFs are sector based. Yes most are asset based but many are synthetic yes 100% derivative based and on top of that some of those are leveraged. This is what my video will be about these are defiantly in a bubble.
@FinanceDaily
@FinanceDaily 4 жыл бұрын
Fernando Orozco that’s a 3x leverages 100% derivative based so it’s insanely risky just FYI you make your own decision. My video is on that exact index.
@remlatzargonix1329
@remlatzargonix1329 4 жыл бұрын
Tom Isaacs ....in my opinion the questions you have to ask yourself are 1) "what is the empirical evidence on active vs passive investing?".....the answer is, on average, that after fees and expenses, active management tends to produce worse results!.....Now, that is on AVERAGE, so there are some good stock pickers who can, after fees and expenses, "beat the market", but they are few and far between and even fewer can do this consistently. (i.e. Investing is a long-term activity, so being lucky/good over one period, may not happen over thirty to forty periods ). The second question is: "do you have a competitive advantage (or do you have access to someone who does)?....if the answer is yes, then active investing may be for you. If the answer is is no, then stick with passive investing. The problem here, is how to determine "competitive advantage"?....past history may or may not be a good indicator....will strategies that worked in one investment regime work in another?....How does their strategy change to,reflect different regimes?,,etc.
@CapitaoEstrela
@CapitaoEstrela 4 жыл бұрын
If enough people belive it is a bubble it will burst as one. If people are happy with passive investing on ETF and its derivatives and discard the idea of a bubble we will eventually be in one. To avoid a bubble we need balanced thinking on both sides :p but heck I am neither investor neither PhD. Thanks for you video it is really easy to watch and I feel I learned something
@tipsy09
@tipsy09 4 жыл бұрын
The market crash will occur after I begin investing for the first time
@dfnt12
@dfnt12 4 жыл бұрын
If your young enough to be investing for the first time and your not desperate for the money you can just ride out the crash. Index Funds will eventually recover their value unless the US economy completely and permanently falls apart
@arjunsatheesh7609
@arjunsatheesh7609 4 жыл бұрын
The market did crash after I invested for the first time and I just held on and averaged down and eventually exited from a few bad choices a year later with a fair profit.
@SG-jm7np
@SG-jm7np 4 жыл бұрын
I was just thinking the same thing lol
@cooperwinslow7999
@cooperwinslow7999 4 жыл бұрын
Currently down a couple hundred on an equity trade. Bought in at a new low of $15 and I thought I hit it smooth but it keeps going down. It concerned me but then I remembered that I'm an 18 year old college student with no dependents and about 85% disposable income so. Even if it does crash when you begin, just buy more lol see it as an opportunity.
@crissixstrings
@crissixstrings 4 жыл бұрын
Lmao!
@BenFelixCSI
@BenFelixCSI 4 жыл бұрын
This was an excellent nuanced discussion of a poorly understood topic. Well done, Richard!
@ThePlainBagel
@ThePlainBagel 4 жыл бұрын
Thanks Ben!
@FinanceDaily
@FinanceDaily 4 жыл бұрын
Ben Felix true well spoken
@alvaroga91
@alvaroga91 4 жыл бұрын
I love this simulation where my favourite finance-related youtubers get to discuss with one another. Keep up the good work you both!
@PapaCharlie9
@PapaCharlie9 4 жыл бұрын
@@ThePlainBagel Whew! I was worried Ben was going to give you grief for coming out as an *active investor* ... dun dun dunnn! :D
@marneuscalgar1560
@marneuscalgar1560 4 жыл бұрын
Ben would not give "grief", Ben will just hand over the Peer reviewed papers and throw words like "CAPM" or "%-factor" at him until the problem goes away xD
@toilet_cleaner_man
@toilet_cleaner_man 8 ай бұрын
Micheal Burry, the man who has successfully predicted 55 of the last 2 financial crashes.
@badams4982
@badams4982 7 ай бұрын
After is chip short last fall, someone should check on him
@Serizon_
@Serizon_ 6 ай бұрын
Holy LMAOOOOO
@haruruben
@haruruben 3 жыл бұрын
Everyone tells us to diversify, there’s nothing more diversified than investing across the index
@PhantomSavage
@PhantomSavage 3 жыл бұрын
When you invest in a total stock market index you're essentially betting on the US economy to continue to grow. Thing is, the US economy has never not recovered from a crash, even apocalyptic crashes and crisis like the housing bubble or the great depression. You're essentially betting on the nation to continue to fare well, which it has consistently done so since its several hundred year inception. But if the US economy completely disintegrates (civil war, nuclear anhilation, ect) then investment strategy doesn't really matter at all, does it? If the index fund investors are screwed, then EVDRYONE is screwed. ... except those that heavily invested in international markets.
@kaydens6964
@kaydens6964 3 жыл бұрын
I'm Chinese living in Australia, so Im heavily invested in three markets including the US. However I dont think my portfolio will survive a US disintegration lol The Aus market follows US to the beat, and the Chinese market gets moved by foreign investors(US) regularly.
@svadhisthana8867
@svadhisthana8867 3 жыл бұрын
Every country does well until it doesn't. The past tells you nothing about the future.
@0xc0ffee_
@0xc0ffee_ 3 жыл бұрын
The market could plateau, crash and start growing again but you have no assurance it will exceed the original plateau limit
@joserodrigues7699
@joserodrigues7699 3 жыл бұрын
except japan never recoverred
@Ikaros23
@Ikaros23 3 жыл бұрын
Japans index is not likvid and open for foreign retail investors. That is it is mostly just profesjonals investing there and lokals who where broke in the 90s. The us economy is ALOT larger and is globaly ownd. That is the whole planet buys dollars, apple stock and s&p500 etfs and indexfunds
@МатвейВолтов
@МатвейВолтов Ай бұрын
Probably my favorite video on your channel, keep it up👏
@stephenmarkley7968
@stephenmarkley7968 4 жыл бұрын
I'll be writing a research paper on this, or more about how ETFs are taking away clients from bad investment managers.
@mennovanlavieren3885
@mennovanlavieren3885 4 жыл бұрын
Interesting thesis. That would be a long term plus for active investment as trust is restored.
@BigHenFor
@BigHenFor 4 жыл бұрын
Is that an original thesis? Not really. That debate has been going on in the discipline for years. However, you should consider that although index funds and ETF's are empowering the Ordinary Joe to passively invest, he might just be jumping from the frying pan of poorly performing active fund managers into the fire of badly index designers. Remember, the Ordinary Joe barely understands how the underlying assets of IFs/ETFs are structured, or how sound the indexes are. But, they're easy right? Index Funds are considered to be safer than ETFs, and there's possibly a very good reason for this: probably a lot of those poorly performing Active Asset Fund Managers have been following indices in the main and limiting their exposure to more risky investments. i.e. They been hedging their bets, hence the underwhelming performance.
@nelsonenegbuma6033
@nelsonenegbuma6033 4 жыл бұрын
I would like a copy of your report
@Direct.injection212
@Direct.injection212 4 жыл бұрын
Very interesting topic, take note of how AALTX has a load, while VFIFX does not have a load. Good luck.
@MrSherhi
@MrSherhi 4 жыл бұрын
@@BigHenFor I dont think all those issues are relevant for "ordinary joe", after all it just tracks some top companies based on some criteria and there are so many ETFs that it kind of is an active purchase...statistical research has shown that active funds only sometimes beat related ETF (maybe 5% of them, dont remember exactly) and almost none of them are able to do it time and time again up to a point of it being almost impossible for ordinary joe to find such active fund (for example in my country in EU there are maybe 1000 active funds and NONE of those beat the market, the difference vs ETFs is like 3-4% PER YEAR - just do the math in 10 year scenario)....the key for Ordinary Joe is not to pick the best option but to avoid mistakes (just like in tennis for example, better players on average are those who do less mistakes not those who actively beat the opponent by great strikes)
@SeanLei
@SeanLei 4 жыл бұрын
In my mind, if a total US index fund tanks that means the entire us stock market tanked. No point in owning individual stocks. Imma just buy more of the index fund at a discount
@tipsy09
@tipsy09 4 жыл бұрын
Sean Lei - Money & Minimalism you’re a genius. How do you do it!
@Swarm509
@Swarm509 4 жыл бұрын
If that happens I suggest diversifying into canned beans and 5.56 cal.
@SeanLei
@SeanLei 4 жыл бұрын
@@Swarm509 Eat the beans then sayoonara?
@SeanLei
@SeanLei 4 жыл бұрын
@ The best low-cost passive index funds have
@SeanLei
@SeanLei 4 жыл бұрын
J White Are you proposing to invest in individual stocks to avoid a .04% expense ratio? You could beat an index fund but the chances of beating a diversified, broad index are *very slim*. This is why so many stock pickers perform so poorly. Also I wouldn’t go so far as to say stocks are extremely illiquid. Equity tied to houses are extremely illiquid, but for stocks you just sell them and wait a few days to transfer to your bank account. In the event of a recession and the economy tanks, there may be more (panic) sellers than buyers, but as warren buffet says the smart investors will simply continue to hold their assets and buy more.
@fzigunov
@fzigunov 4 жыл бұрын
Too many fortune tellers in the financial market... One of them is very likely to be right, but a priori can you tell who?
@Olav3D
@Olav3D 4 жыл бұрын
If the stock market crashes the active investment funds will fall and then get the additional management fees on top of that, I`ll stick to index funds. No reason to pay finance guys to play a zero-sum game with my money.
@benjaminm39999
@benjaminm39999 4 жыл бұрын
The funds themselves can't be in a bubble. Only the underlying investments can be in a bubble. If the stock market is in a bubble, then we aren't going to be any better off holding actives rather than passives. In reality, after charges, we'd be even worse off. Passive investing is becoming more active now anyway - we can now track styles - value, momentum, quality, size....there is an algorithm for everything! It doesn't make any difference if an algorithm makes the buy/sell decision, or a manager does. Fund managers are just butt hurt that they can't just give us market returns or worse and charge 1% anymore. They now have to sing for their supper by outperforming. Most of them can't do it!
@simonhelledie4587
@simonhelledie4587 4 жыл бұрын
So true
@morgangrant5180
@morgangrant5180 4 жыл бұрын
What you're saying is true but it isn't any different than what people like Burry are saying. Passive ETFs are creating a bubble, not exclusive to passive ETFs but to the market as a whole. Anyway, it's not true anyways. There will always be price discovery. Look at daily, weekly, monthly movements in s&p 500 stocks individually. They don't move up and down together in unison.
4 жыл бұрын
Will Roberts you clearly don’t understand how they work.
@victorespino5650
@victorespino5650 4 жыл бұрын
Fund managers have algorithms that you don't have. There are some robo investing tech with extremely low fees, but typically they just do weak tax harvesting techniques and also do nothing more than active rebalancing. Active investing through advisors use tactical investing strategies over strategic investing. And even then, robo investing people, invest emotionally still. Your advisor is supposed to keep your emotions in check and keep you on track, mentally and emotionally, and financially. Now, it's true that the underlying investments would have to fail first for the etf market to burst. Makes the most logical sense. And couldn't the same thing be said about mutual funds?? The underlying stocks may be more liquid and easier to sell, but I don't know why the underlying stocks would be more liquid to sell than the etf? You can explain that part to me.
@victorespino5650
@victorespino5650 4 жыл бұрын
Ooooo the ETFs can be in a bubble! Because etf trade on their own and the trading (buying and selling) is what make the price go up and down, so if ETFs are trading more than the underlying investment, then the value of the ETF can begin to pull away and be different than the underlying investment. So if the prices increase soooooo much more than the underlying invest, when the underlying invest fails, then the etf will tank exponentially more than the underlying invest, percentage wise. He mentions arbitrage, which can work only in bull markets.
@mikea5745
@mikea5745 Жыл бұрын
On 11/15/2019 when this video was posted, the S&P 500 was at ~3,000. It is currently at ~3,900 (12/12/2022), down from the peak of ~4,700 at the end of 2021. Interesting to see where the markets went since this video was made
@erickzts
@erickzts Жыл бұрын
Based on that data do you believe shorting index funds back in 2019 could be a good decision?
@jarvisb.6013
@jarvisb.6013 Жыл бұрын
@@erickzts Imho no unless you knew about the chinese virus and the impact it was going to have
@rickyj1
@rickyj1 Жыл бұрын
@@erickzts 🤣
@piewert787
@piewert787 7 ай бұрын
S&P 500 just hit all time high of 5,000 today on 2/9/24. It seems we are walking on thin ice right now.
@TheFireGiver
@TheFireGiver 6 ай бұрын
​@piewert787 it definitely will crash at some point, the line cannot go up forever, but that doesn't mean it's an index bubble.
@EvangelistRBColbert
@EvangelistRBColbert 4 жыл бұрын
Active fund managers will never like passive investing, because it doesn't line their pockets. I will still listen to Jack Bogle's and Warren Buffett's advice any day of the week.
@Ikaros23
@Ikaros23 3 жыл бұрын
65% are « market timers». Of the people buying etfs and indexfunds. Thats the main reason they lose over time. People panic and are addicted to short term gratification and the obsession of wanting to predict the markets and politics in the short term. The mix of anxiety, envy, greed, panic is the main movers in the markets.
@IL_Bgentyl
@IL_Bgentyl 2 жыл бұрын
Yeah the expense ratio is drastically lower with etf’s
@mikepawlikguitar
@mikepawlikguitar 2 жыл бұрын
Fuck yeah, and Ramit Sethi.
@finkomsky
@finkomsky 7 ай бұрын
Yeah but buffet recommends putting money into the s & p 500 not all the nonsense ETFs out there
@freddieflintstone5544
@freddieflintstone5544 4 жыл бұрын
The problem is active fund managers and their high fees. Most active fund’s performance is less than the similar index fund. I worked at on company and all the fees added up 7% my 401k never had a gain. I got the boss to drop that company.
@steveantonioni
@steveantonioni 4 жыл бұрын
Thanks for making this video Richard! I think it's very important to make sure that headline topics like these receive a nuanced take and that we make sure to take into account all available information. For example, it's been seen that in the long term no effect is had on stock prices that are added to an index.
@ADSuri
@ADSuri 2 жыл бұрын
I'm watching this is in 2021 and the bubble has burst right now.
@gerardjachymiak5822
@gerardjachymiak5822 2 жыл бұрын
Lol wut it is a bed rock bubble it can not pop
@samsonsoturian6013
@samsonsoturian6013 2 жыл бұрын
Dude, this video dates back BEFORE the Covid Panic. Nothing you see has anything to do with the theory discussed.
@thomassheldon2132
@thomassheldon2132 2 жыл бұрын
You should revisit this topic cuz this bull runs starting to get scary
@CrimsonShaft
@CrimsonShaft 10 ай бұрын
I was concerned then I saw this video came out 4 years ago 😂
@BryanHo
@BryanHo 4 жыл бұрын
As always, great discussion on a complex topic. I’m not worried about a bubble..... yet. I’m more concerned about the growing concentration of voting shares among a small group of institutional investors and the potential implications of this.
@kdpowers
@kdpowers 3 жыл бұрын
This. Even now in July 2021.
@627horsepowers
@627horsepowers 4 жыл бұрын
If it crashes, I will buy a lot. If it does not, I will buy just a little.
@owenferrara
@owenferrara 4 жыл бұрын
If it crashes you keep the money in, there no way the entire S&P 500 fails
@trevors.5922
@trevors.5922 4 жыл бұрын
@@owenferraraExactly, if the committee sees failing companies they remove it from the 500 list. And replace it with higher valued ones
@abcdef.fedcba
@abcdef.fedcba 4 жыл бұрын
Just buy every month a little.
@tomuxp1
@tomuxp1 4 жыл бұрын
@@owenferrara it already did
@owenferrara
@owenferrara 4 жыл бұрын
​@@tomuxp1 My comment still stands. Leave it in. It will recover. Will it be a quick recovery? No. Will it happen? Yes. Should you take your money out right now? Absolutely not
@alejandrobasaldua5930
@alejandrobasaldua5930 4 жыл бұрын
Bat in soup: "index bubble? That's cute"
@Kangroo11
@Kangroo11 4 жыл бұрын
nice comment . nice thinking . index is bubble and so are buy back shares. get ready mate save yourself
@carval51
@carval51 3 жыл бұрын
it's actually not because of bat soup, technically if you cook it you can eat any animals provided they really are safe to eat and had no poison like pufferfish. purpose of cooking is to kill virus or other harmful bacteria though this include good bacteria too. one of main reason is the market hold live animals and that what the cause of it
@TheLouisianan
@TheLouisianan 3 жыл бұрын
haha I mean, rona actually did help correct the market
@davidmella1174
@davidmella1174 3 жыл бұрын
@@carval51 maybe the animal was not well cooked. But i dont believe that it was some animal in a soup that caused this pandemic.
@carval51
@carval51 3 жыл бұрын
@@davidmella1174 there multiple hypothesis 2 that I believe likely is 1. lab where they actually did test a new virus to cure it but the handling is bad which something usual in china either the animal escape or sold again to make some extra buck for people working in the lab resulting in the spread. 2. it just new diseases happen to be mutated from animal to human since the market is full variety of animals that are mostly not treated.
@slossboss
@slossboss 4 жыл бұрын
So long as the invested money isn't borrowed money, it won't explode disastrously. It may still go down or up, but every crash in history has been caused by major borrowing in the belief that people will make easy money. Passive investing doesn't really work that way. It's usually people taking the top part of their paycheck and then spreading it across the market. That means it can be directly affected by other market forces, other bubbles, but in of itself can only provide capital gains because it's already the investor's money. There's no credit or loan to be paid back that the investor would default on causing a devastating crash. It's not the collapse of the market that causes a recession or a depression, it's the inability to pay back the debt.
@FrankCirillo94
@FrankCirillo94 4 жыл бұрын
Et al is just latin for "and others" many financial papers since they have multiple authors, will use et al instead of listing the names of everyone who contributed.
@burner1303
@burner1303 4 жыл бұрын
Wrong! Et al is a polymath who has published more papers than anyone else in history.
@stevenfung1333
@stevenfung1333 4 жыл бұрын
Burn Er Heard he’s best friends with Feat.
@ChaosturnMusic
@ChaosturnMusic 3 жыл бұрын
@@stevenfung1333 starring has been real quiet since the feat. mixtape
@PW060284
@PW060284 4 жыл бұрын
you're an active investor?! gasp. stone him! jk. Can you do a video about how you rationalize being an active investor?
@Christian-ki5js
@Christian-ki5js 3 жыл бұрын
Passive is for beginners, watch peter lynch. The goal is to beat the market, don't listen to anyone who says you can't.
@Jefff72
@Jefff72 3 жыл бұрын
I am both. My 401 goes to Fidelity and is spread into different funds. I manage which funds to put it in but that's it. I also have money at Schwab where I actively manage. I have made both good and bad decisions. Still kicking myself for passing on Tesla at $30. I would have turned $600 to $85,000, but I didn't.
@stevenstone307
@stevenstone307 3 жыл бұрын
@@Christian-ki5js If you could beat the market, you're better than Warren Buffet. You can't pick winning stocks. Good luck to you in your approach, but don't say something like anyone saying you can't is wrong, when the data shows that over time, an investor in a passive fund beats the active investor consistently.
@Christian-ki5js
@Christian-ki5js 3 жыл бұрын
@@stevenstone307 yea yea. The average investor is an idiot. Half of people are better than them. I know very smart people who pick bad stocks and gamble. It's not easy, but it's simple. While I DO preach that most of your portfolio should be passive and that sector allocation is more important than stock picking, you're still giving an oversimplified reddit fallacy as your argument. Don't use averages and big data to try and argue what INDIVIDUALS can or cannot do. Warren buffet IS the market... how do you beat it when you are too big? Scale is very important but ignored by the beta ilk of "you cant beat the market" soy boy repeaters.
@stevenstone307
@stevenstone307 3 жыл бұрын
@@Christian-ki5js haha good luck to you
@aurkom
@aurkom 4 жыл бұрын
Cremers and others
@kelaiah86
@kelaiah86 4 жыл бұрын
Aurko Mitra I laughed so hard at that part, but no one else in the comments seemed to notice hahaha
@bscottking
@bscottking 9 ай бұрын
4 years later . . . no bubble
@dcocky1
@dcocky1 10 күн бұрын
Still no bubble 2024 September
@alexandersalazar1085
@alexandersalazar1085 4 жыл бұрын
The only way how index funds can be in a bubble is if the underlying assets are in a bubble. The fund tracks the underlying assets not the other way around.
@nathanwi1147
@nathanwi1147 3 жыл бұрын
Duh, S&P 500 P/E is 40.
@Jack-fd8cx
@Jack-fd8cx 4 жыл бұрын
YES!!! Thank you! Finally, someone points out that REGULATION also played a very big role in fueling the fire of lending to high risk credit borrowers. The movies and media seem to gloss over those failed regulations and many, many other failed regulations.
@dailyrant4068
@dailyrant4068 3 жыл бұрын
Regulation ALLOWED high risk lending, whereas high risk lending would happen in private market regardless. So you are also going too far to the opposite extreme. Need example? What do you think loan sharks are?
@ajelicits3435
@ajelicits3435 2 жыл бұрын
@@dailyrant4068 they lent to high risk people because the government guaranteed them pay outs if the people couldn't afford payment. these guys aren't dumb, they would only lend money to certain people if they knew they would be reimbursed by the state. not a good business model to lend money to people who can't afford to pay you back, right?
@uwuwgrhdhwj
@uwuwgrhdhwj 8 ай бұрын
You hear "regulation" and assume it's bad, instead of assuming that there's good and bad regulations. Don't spread your bias
@wdeemarwdeemar8739
@wdeemarwdeemar8739 4 жыл бұрын
I have beaten Micheals returns for the last nine years so I will just keep on keeping on.
@bradley6386
@bradley6386 4 жыл бұрын
Of course a hedge fund manager would call them a bubble. Hedge fund managers can't out perform the rates of ETFs
@asmrbill5931
@asmrbill5931 4 жыл бұрын
cartiphulis Burry’s hedge fund closed in 2008.
@Prespanda
@Prespanda 4 жыл бұрын
@@asmrbill5931 He still runs a hedge fund
@misbahkhan7361
@misbahkhan7361 4 жыл бұрын
and the pandemic triggered the crash.you get an L my friend.
@leocriss6354
@leocriss6354 4 жыл бұрын
For anyone who doesn’t understand why people don’t like ETFs. 1. If everyone buys into any one thing at a high enough rate there will be a liquidity issue sooner or later 2. Passive investing means that you aren’t actually evaluating whether a company is worthy of your investment or not, you’re simply deciding that if your portfolio is diversified enough, you are ok with losing on some of those companies because another one will be added to the fund. 3. Prices increase for Individual stocks when added to an index even though said company may not deserve your investment. So you effectively have stocks in your portfolio just to say that your portfolio is diverse and not because you believe every individual stock in the portfolio is a good investment. 4. If everyone is invested into ANYTHING, do some research and you’ll see that that’s not necessarily the way to go (1987, DotComBubble, 2008) and holding the opposite side of the majority has always panned out for those who do the requisite research.
@Anonymous-wy5dc
@Anonymous-wy5dc 3 жыл бұрын
@@leocriss6354 I get what you're saying but I truly believe that lots of these so called stocks that end up being listed in the indexes are actually the result of active investors. Surely we can all agree that Tesla doesn't deserve the hype it has right? As a result sooner or later is bound to be in the S&P 500 and a result of that will be it will be added to the big indexes. They say time is money and I rather the rest of the people decide where they spend their time. I'll just choose the basket that they themselves chose to be in the position for me to put my money. Will I put my savings on the tech sector? Probably not yet I see people put 100's of thousands behind one specific stock. Nowadays to become a billion dollar enterprise all you have to say is that you smelled the insides of a new Tesla car. Doge to the moon and what not. The bubble is elsewhere imo. Nobody making a movie out of the indexers anytime soon, meanwhile Burry making a cameo in this GME fiasco.
@HowMoneyWorks
@HowMoneyWorks 4 жыл бұрын
"Regulation also played a key role in encouraging banks to lend to lower credit borrowers"... needs to be discussed more, but it can get political at that point. So people, just do your research ;)
@maximilianmusterhans4659
@maximilianmusterhans4659 4 жыл бұрын
It turned out the risk models of banks weren't racist after all. :)
@noahi.1381
@noahi.1381 4 жыл бұрын
All knowledge aside, not only is this video quite informative, the comments are surprisingly academic and constructive too. Still, thanks for the info! I just started investing last March, and I’d like to know the rundown of all things finance.
@jacobprice2579
@jacobprice2579 4 жыл бұрын
The main reason I’ve got into ETFs and Unit trusts really centres my circumstances. I’m 24 and just graduated from University. I have put some of my savings into investments but the majority (approx 3/4s) into a savings account so I can put down a deposit on a property sometime in the new year. So from my view, I’m A) just starting out and B) have very limited capital at risk. Therefore, I’m happy to accept short term losses as I’m planning to be in the game for decades yet. So to me, ETFs and UTs are a good way of exposing myself to varied and diversified investments without paying through the nose in commission. As I get pay checks each month and save more, I may look at switching more to the underline investments more. At the moment UTs are particularly valuable to me as they only have a single daily valuation point. So it’s easy to keep track of how things are going. Would appreciate any thoughts people have on this approach.
@belt1749
@belt1749 Жыл бұрын
How’s it been?
@jacobprice2579
@jacobprice2579 Жыл бұрын
@@belt1749 worked pretty well since I wrote this thanks.
@kchal0
@kchal0 4 жыл бұрын
This has become my favorite channel on KZbin lol. Great job as usual.
@kdpowers
@kdpowers 3 жыл бұрын
Wonder what your thoughts are on this in 2021? Post-COVID market crash and recovery.
@RBmusic2000
@RBmusic2000 2 жыл бұрын
wow. the more i watch the real bagel, the more i realise how risky i've been with my stocks and how little i really know.
@kaotikkk1
@kaotikkk1 2 жыл бұрын
These have gone up for 2 years straight bubble my ass
@filofilo8127
@filofilo8127 4 жыл бұрын
The influx into these funds is driven in part by low interest rates on term deposits. Those who aren't active investors are looking for a return on their savings
@cerebralcaustic
@cerebralcaustic 2 жыл бұрын
2022 says 'yes' index funds were in a bubble. And bonds. And real estate. And crypto.
@joelman1989
@joelman1989 4 жыл бұрын
People are putting a lot of weight on the opinion of a guy that got it right once.
@rafaelbarrientos8212
@rafaelbarrientos8212 4 жыл бұрын
You speak of him as if he's your ordinary individual investor. The man is a hedgefund manager. A very credible one at that.
@warbear.6
@warbear.6 4 жыл бұрын
Twice actually...
@floxy20
@floxy20 3 жыл бұрын
Good Lord! et al? You young whippersnappers should know "et al." means "and others" from the Latin et alii. I think the profession of scribe is about to make a comeback.
@Grythix
@Grythix 4 жыл бұрын
This was exactly the video I was looking for! Thank you
@therookiesplaybook
@therookiesplaybook 2 жыл бұрын
Trying to find individual stocks to buy = bad, buying the whole market instead = bad. WTF are amateurs supposed to do?!
@CozyButcher
@CozyButcher 4 жыл бұрын
Spot. On. - some dude that works in futures
@tomlxyz
@tomlxyz 3 жыл бұрын
You work with futures? Proof it by telling the future
@cheikhoudiallo1560
@cheikhoudiallo1560 4 жыл бұрын
Agreed , with all the data and knowledge accumulated I still believe that it is extremely hard to predict a bubble . There are so many factors that come into play and so much complexity.
@raosiddharth4726
@raosiddharth4726 4 жыл бұрын
Warren Buffett recommends index funds since many years, he knew if you hype up something it will become a bubble, he indirectly made it a bubble Michael burry is actually a good guy here
@nachannachle2706
@nachannachle2706 4 жыл бұрын
What puzzles me is that people are STILL listening to these "financial gurus" as if they can read the future, meanwhile they engineer the future with their own narratives, for their own personal gain, and at the expenses of the majority of their listeners. Give me your ice and I will give you water, basically.
@raosiddharth4726
@raosiddharth4726 4 жыл бұрын
@@nachannachle2706 exactly
@DiegoEsteban1910
@DiegoEsteban1910 2 жыл бұрын
This prediction didnt age very well... Trying to time the market if an awful idea.
@JasonWilliams89
@JasonWilliams89 6 ай бұрын
Covid 19 happened lmao
@lawrence0101
@lawrence0101 3 жыл бұрын
Thank you for the video! Very informative! Certain indicators do point out the bubble formation, in my opinion. All market cap weighted index funds blindly track equities based on their benchmark indices, irrespective of the dependability of the underlying stocks. A few examples/facts that are frustrating about index funds are as follows: iShares Russell 2000 Value ETF (IWN) and iShares Russell 2000 ETF (IWM) are now both tracking AMC as it's Rank 1 holding, only because this meme stock gained a higher rank based on market cap, only in the last few months. Both the above ETFs also used to track GameStop (GME) in their top 10 holdings for many months this year, but now, the attention seems to have shifted to AMC. Index funds do not care for volatility / turnover within the index caused by market cap changes. Also remember that indices are fully actively managed, in that, someone makes a decision to add or kick out a stock, so there is risk involved. The fund itself is termed as low cost, obviously because the allocation is all automated, but the risk is there because you are 100% relying on the decision made in the index. All Large Cap Growth ETFs, you name it, Vanguard, Blackrock etc, have all been tracking Tesla which is in the top 5 rank since last year, because it got promoted to S&P500. Tesla is still a questionable stock for it's reliability based on the high speculation and overvaluation! Tesla has huge volatility and uncertainty, and to put a large chunk of your retirement savings in Tesla via an index ETF is not very comforting! The decision to promote Tesla to S&P500 top 10 was very brash in my opinion. For anyone invested in index funds, they are inevitably forced to invest their money indirectly in meme stocks or stocks that are overvalued because a market cap weighted index tracks it!
@SeihaS
@SeihaS 4 жыл бұрын
Always appreciate your thoughtful analysis and explanation! I'm a pretty big passive investor too. Although there isn't a large amount of trade volumes, what do you think would happen if there's a large sell off and ETF holders decide to sell? I think that scenario could lead to a more precipitous fall on the underlying securities.
@ewileycoy
@ewileycoy 3 жыл бұрын
Hmm, this did not age well?
@Tweakjones5
@Tweakjones5 3 жыл бұрын
@Tahir look up reverse repos and short on everything
@that_investor
@that_investor 4 жыл бұрын
love the videos, and I admire the segway from pure animations to videos of yourself... good content... keep it up!!!!!!!
@mathewmiletich5986
@mathewmiletich5986 4 жыл бұрын
Love your work because of your excellent ability to breakdown complicated topics! btw, I found you during my CFA Level 1 studies and it helped me understand some of the more challenging topics within the Equity and Fixed Income sections; happy to report that I passed Level 1 and moving on to Level 2 this upcoming June! I appreciate your work!
@darkchocolate3390
@darkchocolate3390 9 ай бұрын
If you invested $10K into VOO when this video came out, you'd have $15.8K rn. Not the sexiest return, but so much for a bubble.
@samsonsoturian6013
@samsonsoturian6013 3 ай бұрын
That's not the argument being made.
@prashunpcchakraborty70
@prashunpcchakraborty70 4 жыл бұрын
Excellent content as always Richard, lately the DJI and S&P500 made lifetime highs but I have never seen this much amount of caution by almost every analyst on the street. The yield curve is negative as well. I wonder if the amount of pessimism was the same during 2007. Got any take on all this? Maybe a future video?
@zach4216
@zach4216 4 жыл бұрын
Betting against the S&P is the same as betting against the future of America.
@fernandoorozco149
@fernandoorozco149 4 жыл бұрын
So am I doing wrong if I want to put my money on a 3x leveraged ETF like TQQQ if this ETF is meant to follow the market and it's relatively stable compare to an oil ETF or commodities? I'm starting investing, so with this TQQQ I find diversification with a stable levegeraged gains... Please correct me If I'm wrong.
@Lakiman52
@Lakiman52 4 жыл бұрын
Fernando Orozco you're not wrong, but there is some material information you are missing that could affect your investment decision. There is something that occurs in leveraged ETF'S called "Beta Slippage," and I'm going to try to avoid complex terminology since you said you're just learning about investing, but essentially, in a really unstable market with no clear trend, the leveraged ETF will significantly undererform the asset it is tracking (in the case of TQQQ, it would underperform QQQ) However, the opposite applies in a trending market, as long as the trending market is stable (# of up days># of down days for a bull market, vise versa for a bear market). The issue is, this is only a partial reality and markets usually experience quite a bit of chop, even in trending markets Any sort of choppiness is what kills leveraged ETF'S, but this effect is usually overstated. As long as market volatility is low, and trending lower, the leveraged ETF has a place in a total portfolio.
@fernandoorozco149
@fernandoorozco149 4 жыл бұрын
@@Lakiman52 Thank you so much for this new info, that's why I'm not so interested in ETF's focused on commodities because of the high voladility they have because I'm more on the swing/long term investing side. That's what I like about this particularly ETF so I can gain more profit compared with the original index with some diversification and also I usually put a trailing stop to watch my potential losses and secure my gains when the trend reverse. But sometimes I'm not so sure if this is too good to be true, and thank you so much for your advice, now I can apply this advice to my investing strategy.
@Lakiman52
@Lakiman52 4 жыл бұрын
Fernando Orozco no problem, the only other thing I'd recommend is to not have TQQQ be your entire portfolio, because there is still some significant risk with leveraged ETF'S, it works significantly better if it's only a portion of a complete portfolio
@J65Rudy
@J65Rudy 4 жыл бұрын
@@fernandoorozco149 TQQQ doesn't really follow the market, it follows the nasdaq-100 which is market cap weighted, making the majority of the index made up of only 8 stocks. TQQQ could be quite vulnerable in a market nearing the end of a cycle. Say the doomsayers are correct and market makes a large correction, there would a large amount beta slippage due to TQQQs daily rebalancing and a trailing stop will probably not be able to protect you if the move is rapid enough.
@KaptainKerl
@KaptainKerl 3 жыл бұрын
its funny how we think just because a person has been right once they must be right every time. same as when a stock is @ an ATH people assume it will continue to rise.
@Jbm510
@Jbm510 4 жыл бұрын
7:55 "Cremers et al (2016)" is a citing term for Cremers and all other authors/writers. I'm sure you knew that. You just seemed confused.
@BenJustSaid
@BenJustSaid 10 ай бұрын
Ok, I'll pull all my shit and leave it under the matress.
@luisluiscunha
@luisluiscunha 2 жыл бұрын
I really like your channel. I learn so much from it. Not only the content is great, but the way it is presented is very compelling and the videos are so well put together. Thank you so much. Keep the good work.
@peplajso
@peplajso 4 жыл бұрын
Well, we should invest for 20-30+ years though, right ?
@MegaSirpaul
@MegaSirpaul 4 жыл бұрын
Awesome video. Great job staying away from fear mongering, everyone tries to make a name for themselves trying to call the next “bubble” when in reality if anyone had any real evidence and publicized a bubble, that itself would deflate the bubble before it pops. They’ve been calling for the next crash since I started investing in 2012, and if you listened to those trying to sell you fear you would’ve missed out on 7 years of solid bull market. It’s always time in the market, not timing or trying to call a bubble.
@finsgutus
@finsgutus Жыл бұрын
What comes to Eisman, there's this famous quote from Keynes: “Markets can stay irrational longer than you can stay solvent." To me that really materializes the problem with timing bubbles. It's not enough to know something is a bubble (even if that is very hard by itself), but you'd also need to somehow know when the correction will happen. This also almost bankrupted Burry as he was burning money every day leading to the crash. Not sure for how much longer he could have held his swap positions. And as we see in the movie, everyone was not happy waiting... To me it seems shorting even something that's a "well-known bubble", especially with lever, seems like a financial suicide as you're almost certain to get knocked out as the underlying increases in value before the correction happens. If it ever happens. You might be right, but can you stay solvent until the market agrees with you? Being right is a sad win if you're already bankrupt 😅 To me one of these was Tesla stock. I was certain for months that it's overpriced on the market, but having no clue when it would correct itself, could not really position myself to benefit out of it in any way. Well, at least I didn't go long on it on the top like so many others 🙏
@AdamHayekMilton
@AdamHayekMilton 4 жыл бұрын
End of the day, the value of the company we buy has not much to do with the price we pay. Quote: Price is what you pay, value is what you get. --Warren Buffett
@pgoeds7420
@pgoeds7420 4 жыл бұрын
Warren can afford 2 Ts in his name.
@AdamHayekMilton
@AdamHayekMilton 4 жыл бұрын
pgo eds 🤣
@garystinten9339
@garystinten9339 3 жыл бұрын
Mentions CDOs The big short intensifies
@MrMiniPancakes
@MrMiniPancakes 4 жыл бұрын
He also has atleast 25% of his portfolio in gamestop lol
@Spitsinbums
@Spitsinbums 4 жыл бұрын
Ahhahaha
@Prespanda
@Prespanda 4 жыл бұрын
I don't think GameStop will survive the decade
@miguelpereira9859
@miguelpereira9859 4 жыл бұрын
Burry is a a super contrarian
@Exachad
@Exachad 4 жыл бұрын
This comment did not age well. Gamestop has almost doubled.
@fernandoecamp4462
@fernandoecamp4462 4 жыл бұрын
@@Exachad actually more than double. but tailored brand is worth about 5% of what is used to, filled for bankrupcy, and Burry had a big stake on that, not sure if he sold it. That shows there are no gurus or geniuses.
@Hamlet137475
@Hamlet137475 4 жыл бұрын
If index funds/index ETFs are in a bubble, then the stock market itself is a bubble. So if passive investors go down, active investors (the vast majority) will go down with it. It's overwhelmingly better to be passive for 99.9% of people. Some people want to think their intelligence and decisions make them rich, that they control their destiny. But how often are traders wrong? A lot of the time unless there's inside information or a lot of knowledge the trader knows that the average Joe (or person who think they're exceptional but isn't) Active traders, hedge funds, Wall St are afraid of being made obsolete by index/passive investing, that's why they're scared.
@nachannachle2706
@nachannachle2706 4 жыл бұрын
Good points! Also, the "cryptomarkets" (where virtually ANYBODY can become a "trader") are stealing their bread from the dining table. They are right to be afraid and tense. :)
@abrvalg321
@abrvalg321 4 жыл бұрын
But what about Bagel index? Is it overinflated, ready to burst?
@ThePlainBagel
@ThePlainBagel 4 жыл бұрын
Well, I'm not supposed to give my opinion on this channel, but the bagel index is always a sound investment
@blue7lvn245
@blue7lvn245 3 жыл бұрын
The economy itself is a bubble lol has been a while
4 жыл бұрын
"It's almost as if economics and finance are complicated fields! Who would've thought?" Hahaha I love it, I've watched many videos on this and am still very perplexed as to what to think. ETF's/Index funds certainly have similarities to CDO's as they package together multiple securities but are they really inflating the market? Hard to prove.
@JohnSmith-ox3gy
@JohnSmith-ox3gy 4 жыл бұрын
Entrepreneurial Finance You can "measure" inflated prices by comparing evaluations to the growth but this takes time and requires open and honest reporting.
@shawnjavery
@shawnjavery 4 жыл бұрын
What makes me worried about this is that after assets have been bundled off together it becomes harder to see the underlying value that supports the market price of the assets. Market price doesn't tend to be the best indicator of true value for an asset, as it's hard to tell if one will really get that value if they cash out. As for whether index funds have a bubble or not, it depends on whether the whole market is in a bubble or not. There's reason to believe that this is the case. Peter Zeihan has done a lot of videos on this, but the basic idea is that the market is glutted with retirement savings and foriegn capital flight, lowering interest rates and propping up asset values beyond what local incomes could support. This is only a bubble if the factors that are causing an inflated price are likely to suddenly change, and while I'm not sure about capital flight, retirement savings are going to decrease as a larger proportion of the US enters retirement.
@ecpgieicg
@ecpgieicg 4 жыл бұрын
11:10 Imagine a volume of trade 35% by value is made on the options and future contracts of each stock. That will certainly be problematic. And long before that, the market makers would probably adjust their modeling and therefore the bid/ask spreads according to the extent they would then be unable to hedge. The thing is, ETFs is still far from majority. And 35% synthetic doesn't mean literal 35% trade by value in derivatives either. Are the expense ratio fixed in the contract for these levered ETFs? Probably not right? One thing that will happen if the purchase of these ETFs cause excessive trading on options and futures is that the fund expenses will eat up the fund's value. And the effect may as well just end there. It'd be curious to see some modelling on what would happen if demands on these ETFs become excessive. It's still a non-factor at the moment.
@noidea6044
@noidea6044 4 жыл бұрын
well, an active hedgefond manager who makes money investing peoples money makes a statement against a product, where people can invest their money without active hedgefond managers like michael burry... all right.. i guess smoking cigarettes is good because the people who sell those say, that they are good for you
@wcg66
@wcg66 Жыл бұрын
Wouldn't an index fund bubble mean the index is in a bubble? Most funds are based off of an index based on the Top N stocks on a particular exchange. Implying there's a bubble in the market in general is fair but I don't believe it's because the buying influence is solely because of index funds/ETFs. I'd also point out that many of popular funds are made of the highest market cap companies on the market. Are they in a bubble? Probably still but not because of ETFs. The more I hear about Burry's position, it seems like he's looking at more esoteric index funds.
@theoddparty3052
@theoddparty3052 4 жыл бұрын
This kinda goes along the lines of inflation. Because a lot of people recognize a store of value that store of value is overvalued than it should over decades
@fauxrake5256
@fauxrake5256 Жыл бұрын
I don’t understand, if the creation of more units of the index funds means that they have to go out and buy more of those companies then is the existence of index funds artificially pushing those prices up? And every time somebody buys into an index fund, for example once a month on payday, then doesn’t the index fund go out and purchase more shares? So the buying of index funds once a month forcibly means the purchasing of those underlying securities. Unless nobody is actually buying and holding and they’re all just selling their index funds to all the time which would completely defeat the purpose of the whole buy and hold strategy
@jirehgoh7571
@jirehgoh7571 4 жыл бұрын
"et al" is used in publishing when the article is written by multiple authors so if say there was a research done by a team of scientist they wouldn't list all of them. So in this case of "Cremers et al" its likely just that the first surname was Cremers in alphabetical order. Its a latin term that doesn't get much use outside of academia. Especially in exams where I don't have to remember the names of all the authors just one and can just cite "et al" and be done with LOL.
@ThePlainBagel
@ThePlainBagel 4 жыл бұрын
Yea I'm familiar with it's meaning, just stumbled on how to pronounce it haha
@corn_pop6082
@corn_pop6082 4 жыл бұрын
Yes, Jireh, but "et al" is used ONLY the second time that the same work and authors are mentioned. The first reference to that source must contain all authors.
@thetaomega7816
@thetaomega7816 4 жыл бұрын
@@corn_pop6082 there are different citation techniques
@alittlemexican
@alittlemexican 3 жыл бұрын
VTI up nearly 50% since this video. Being too early is indeed nearly as bad as being wrong!
@michaelsteinberg205
@michaelsteinberg205 4 жыл бұрын
There are a number of things contributing to the US being in a bubble. One thing in particular is that the fed keeps printing money and doing these repo operations which it dubs "permanent open market operations." The reason they keep doing this is precisely because of a lack of liquidity in the market. A quick look at the history of federal expenses in the past 3-5 years will show that of the revenue the government collects, the amount spent on interest payments is has increased dramatically from somewhere around $237B to around $332B (I don't remember the exact figures). If interest rates go up, then the government will have to default on its debt, which would crash the global economy. They can't cut spending for some reason, and they don't raise taxes because that's unpopular. Once interest rates go to zero, they will be able to do nothing EXCEPT print money, and they will try to print their way out of debt, which will devalue the dollar. These POMO have driven the S&P 500 higher, and note that this is not the result of stronger manufacturing, increased sales or earnings of companies, or higher consumer demand.
@markhirstwood4190
@markhirstwood4190 4 жыл бұрын
1. Index funds are not just for beginners, that's a classic trap to fall into. 2. America is 10x the size of Canada so it probably doesn't matter much on the world stage that Canadians buy more active funds. In Canada, for years, we've had much higher management fees/MERs, often around 2.5% but sometimes 2.8%. Smaller funds, lower economies of scale, less investor sophistication, a network of advisors that have an interest in keeping MERs high as well to fund their offices, computer networks, promotional jackets and mousepads and advisor trips to Spain and so on. When our dollar was at or above par with the US dollar some years back, Lexus Canada was asked why a certain vehicle here was $80,000 when a Canadian could drive across the border and buy the same vehicle for $50,000. They said Canadians tell them that they want to pay more, for status, for prestige. That was the end of the discussion. So Canada is a funny market in ways. 3. Typo at 11:28 on the word derivatives, you may want to fix that. I've been investing since 1998 when I was 20 and I still don't understand what Burry is saying here. I mean, I get the terms and the conversation about it, but I still don't get it. I loved the Big Short, I got that, but an index fund bubble, I can't comprehend it. Even after your video, I am no closer to understanding his point. For point number 1: ca.finance.yahoo.com/news/warren-buffett-thinks-apos-elite-193700282.html
@RDMVDS482
@RDMVDS482 4 жыл бұрын
Richard, your humbleness and knowledge is inspiring! Keep up the good work!
@probmcgee
@probmcgee 3 жыл бұрын
The stock market isn’t meant to be a utility for retirement savings. That’s what it’s becoming in large part thanks to passive investing. Stocks may not always go up. We’ve only got a 100 year history or so of financial markets. In the grand scheme of things, that’s nothing. Stowing away the entire country’s retirement savings in the S&P 500 will not end well.
@AnonozChong
@AnonozChong 4 жыл бұрын
Nice to see you and Ben Felix working together making videos. 2 of my favourite finance channels here.
@ChrisJayBoston
@ChrisJayBoston 4 жыл бұрын
Great video, did any of these challenges happen during the initial stages of the Corona sell offs. ?
@8G00SE8
@8G00SE8 4 жыл бұрын
Read a FT article that took the opposite away, managed funds were in a bubble which has started to burst due to index funds and over charging consumers.
@robertcaverly4268
@robertcaverly4268 3 жыл бұрын
happen to remember the name of that article? would like to read it.
@weksauce
@weksauce 4 жыл бұрын
I've seen this bad thinking in multiple articles. Buys and sells aren't the only determinants of price. Holds and not-buys are equally, if not more, determinant! If I trade 1 share, while Warren B holds his millions of shares of Berkshire, he influences the price a lot, while I don't influence it at all! Of course active traders will make up a higher proportion of trading. That doesn't mean that passive investing isn't distorting markets, especially for stocks that were marginally included/excluded from ETFs and other index funds.
@Kevin_Street
@Kevin_Street 4 жыл бұрын
Wow, that was a remarkably thorough discussion of the topic! It's really cool to try and follow what you're saying, though I'm afraid you lost me with the arbitrage stuff. I definitely understood your major points, though. Is it possible that passive investing in the form of index funds may grow to become more of a problem in the future? If it really is a good low risk kind of investment, more and more people will probably get into them over time. Surely that will have a larger and larger effect on the price of stocks in the indexes.
@leestringer
@leestringer 3 жыл бұрын
I always come to this channel for a nuanced and sober opinion on investment topics. Well done.
@rogofos
@rogofos 4 жыл бұрын
Its generaly accepted assumption that:"the more time pass after last recession, the harder will be next recession" And its been a LONG time since 2008* If nothing going to fall next couple of years, than what kind of apocalipse should we expect when markets DO (finaly) fall? *in Russia last recession was in 2014, becoes oil, da. But Im concerned about US&EU economys (if something happen to them, who are we going to sell our oil to?)
@vladgrigorov5747
@vladgrigorov5747 4 жыл бұрын
рома иванов there was a recession in the US in the early 2000’s (after the dot com bubble) and the biggest recession came just a few years later in 2007. What is generally accepted isn’t necessarily true.
@ccc3
@ccc3 4 жыл бұрын
Few things are generally accepted in market behavior. I like to think crashes are like earthquakes - not entirely predictable but not entirely random either.
@ze_ep
@ze_ep 4 жыл бұрын
What is really "harder", a sharp fall and recovery, or a decade long gradual decline?
@nachannachle2706
@nachannachle2706 4 жыл бұрын
That's precisely how GLOBALISATION makes everything trading and finance extremely complicated to make sense of and/or predict.
@chriss.7772
@chriss.7772 2 жыл бұрын
10:51 the funny thing is, that this European tendency to buy synthetic ETFs is actually fueled by American tax policy. If you live outside the US, withholding tax on US stocks will eat up 30 % (!) of your dividends. Synthetic ETFs can rely on domestic derivatives on US stocks, which allows to circumvent the taxation. This means that from a European perspective, synthetic ETFs on US assets have a lower tracking difference and usually perform slightly better in the long run. Withholding tax isnt a one way street of course, but with the US market making up nearly 70 % of the so called "developed markets", this is really imbalanced for a foreign investor. If this tax protectionism should really lead to some sort of turbulence or even market crash in the long run, it would be quite ironic imho...
@jackpalmer6253
@jackpalmer6253 4 жыл бұрын
Index funds and ETFs will be fine. They're a threat to hedge fund managers so they'll spew any garbage to taint them.
@cristianmarinescu3053
@cristianmarinescu3053 Ай бұрын
Really interesting topic for many European ETF investors like myself. Unfortunately, my broker doesn't have any non-synthetic ETF offer mimicking NASDAQ 100 and I understand many European brokers have this problem due to EU regulations. So let's hope we won't see a crash in synthetic ETFs like we saw with CDOs. Fingers crossed! 😆
@KP-dd2ci
@KP-dd2ci 4 жыл бұрын
6:39 Can someone explain how price discovery would still be sufficient if 90% was piled into passive investment ETFs? This seems counter intuitive. To me when that happens, it's just a flow or momentum trade.
@CustomMap
@CustomMap 4 жыл бұрын
If the guy who effectively created the first index fund says index funds will be fine at 90%, you might want to take it with a grain of salt.
@jakemf1
@jakemf1 4 жыл бұрын
MatthewB yup
@fishnsteve
@fishnsteve 3 жыл бұрын
Index fund is not as bad as index boringd
@JarodM
@JarodM 4 жыл бұрын
The Intelligent Bagel~🥯
@yingyang1008
@yingyang1008 4 жыл бұрын
Investment professionals hate index funds because they usually fail to outperform them - most people are just looking for a safe haven to park their cash and get a minimal long term return on
@johnmorey486
@johnmorey486 4 жыл бұрын
7:55 great edit
@argentumtaibhsear621
@argentumtaibhsear621 4 жыл бұрын
The problem is the zombie companies who are only surviving on debt. They make up a huge amount of the stock market and when they go south, the rush to the exit will cause the sell chaos you're worried about. There's a bubble. There's no doubt about that.
@GenExDividendInvestor
@GenExDividendInvestor 4 жыл бұрын
I've always loved ETFs, but am 100% in equities now. I've seen a variety of smart people who disagree with him (and some who agree, lol). I'll just keep investing in quality companies.
@the_primal_instinct
@the_primal_instinct 4 жыл бұрын
How do you evaluate a quality company in the era of Ubers and WeWorks; and a complete lottery of new fields (space, AI, genetics)
@fadhilhabibie6392
@fadhilhabibie6392 4 жыл бұрын
TankingShaman evaluate their free cash flow? Neglect the negative FCF companies. You’ll be safe.
@GenExDividendInvestor
@GenExDividendInvestor 4 жыл бұрын
@@the_primal_instinct I do extensive videos about how I evaluate them :)
@Exachad
@Exachad 4 жыл бұрын
@@fadhilhabibie6392 FCF yield is a good way to evaluate value companies, but this isn't the only way to value companies. Especially not growth companies like Tesla. You have to look at revenue growth and growth in operating margin to get a better idea. For value stocks, debt to equity can also give you a good picture. ROIC is also a good metric for both types of companies. There are also thousands of other metrics, not to mention qualitative data like who the CEO is that can help you value companies.
@YaBetterCallBabu07
@YaBetterCallBabu07 4 жыл бұрын
Comparing the bubble of the mortgage crash to a bubble in index funds doesnt sound like a fair comparison to me. Before the mortgage crisis, banks were being fraudsters acting irresponsibly because they knew they'd get bailed out. They knowingly gave loans to people who cant afford them for commission, and then there were CDOs being marketed to investors to make a bad investment in those mortgages. The difference with s&p500 companies is that that we have no reason to believe theyre acting irresponsibly too. However, I do agree that the simple fact there is an s&p500 index funds being talked about so much means theyre increasingly getting more of investor’s money than in the past. However, with all that money, s&p500 companies can take advantage of capitalism and monopolizing that would give returns to their investors so they come out on top. Unfortunately, monopolies hurt smaller companies because they cant compete. No competition raises slows economic growth as a whole in the long run. For that moral reason, I suggest not only investing in large companies.
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