Comment by seydor
12 hours ago
What will managed funds do?
Are we now suggesting people get out of index funds?
Worse, will this and spacex ipo destroy the index funds?
12 hours ago
What will managed funds do?
Are we now suggesting people get out of index funds?
Worse, will this and spacex ipo destroy the index funds?
The important thing to remember is:
- With the SP500 you're not that diversified because you're very exposed to the tech sector
- With a world ETF like MSCI World you're still extremely exposed to US stocks (about 70%) and of course the tech sector
Destroy is a strong word. Rather, it will make the pension funds and passive investors the bag holders for the oligarchs.
> Rather, it will make the pension funds and passive investors the bag holders for the oligarchs.
Care to explain the mechanics? I’m an investor (both in passive and more active vehicles) and don’t understand what you mean.
Index funds buy companies, for the most part, according to their market capitalisation.
They own more of bigger companies than small.
There's the option of "equal weight" or other strategies but the overwhelming majority is market cap weighted.
Index funds are also really, really big now and contain a lot of money earmarked for retirement/pensions.
In theory if you had a temporarily very frothy market into which you could sell a part of your unprofitable company to some people at a very high valuation, index funds would then mechanically move in and need to purchase and add significant support for insiders to sell into.
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