Re: Stock market thread.
Originally Posted by
doulos
Not a new argument, and I've yet to see anything concrete that actually backs up any of the concerns. Just a bunch of what ifs. Even in that video, Bogle himself admits that the chances of everyone moving over to Index Funds is basically zero. Then the first guy in the interview basically says there is no real issue and the then the three of them engage in a bit of typical investor tv handwringing.
I have a hard time believing enough people will move over to passive investing to break the market, and even if that ever were to happen it would create opportunities for active investors to make money and those passive investors would then swing back to being active investors, thereby fixing the issue. It's a weak argument that doesn't really have anything going for it. The only people feeling threatened by passive investors are the folks trying to squeeze out extra fees from their clients who think they are getting better returns from them than just investing passively.
I read an interesting article recently in (I believe) the Globe & Mail that made a key point about ETF's. The article discussed how the market volume of ETFs had increased rapidly in the past (decade?) but also noted that the trading volume and turnover of ETFs had increased even faster. Thus, many investors were gaining the benefits of diversification through buying ETFs over individual stocks but they were still trying to time the market but frequently buying and selling said ETFs. (I will try and find the article, really good and I'm not doing the points justice.)
The takeaway from the article was that to be a true passive investor one needs both diversification and time in the market. ETFs provide a great deal of diversification but there are still plenty of emotional investors who are buying and selling them frequently making them active investors with diversification. These active investors face the same problems as the active investors of a generation before, higher transaction fees and constantly attempting to time the market, which research shows the average investor simply can't do.
12 team H-2-H 1 year league, daily roster changes, 3 goalie start minimum/week
2xC, 2xRW, 2xLW, 4xD, 3xUtil, 2xG, 5 Bench
G, A, P, PIM, PPP, SHP, GWG, SOG, Hits, W, SV%, GAA, SVs
C: C. Keller, C. Mittelstadt, B. Nelson, R. Strome,
LW: K. Connor, B. Tkachuk, J. Gaudreau, J. Marchessault, E. Rodrigues, A. Lafreniere
RW: K. Fiala, J. Bratt, T. Jeannot V. Arvidsson
D: R. Josi, J. Trouba, E. Gustafsson,
G: L. Thompson, F. Gustavsson, V. Vanecek
NO IR
Reply With Quote
Posting Permissions