Comment by FriedPickles
10 hours ago
The money still comes from somewhere. In this case, those index funds will be forced to trim holdings of other companies. So it's cannibalizing other parts of the stock market.
10 hours ago
The money still comes from somewhere. In this case, those index funds will be forced to trim holdings of other companies. So it's cannibalizing other parts of the stock market.
which, if true, would make an arbitrage opportunity for a fund that explicitly excludes these high valuation targets but buys those trimmed companies (because for trimming to have happened, they must've been sold unwillingly and thus must be under-priced).
Which, again, benefits the wealthy and well-informed and well-connected.
The suckers who have their retirement savings in some kind of index fund because all the experts have been saying, "Buy index ETFs and forget about it" for decades are gonna get fleeced, and the wealthiest get wealthier.
What to do then, if "Boogleheads" are wrong?
I suppose everyone reading this thread counts as "well-informed" then, right? All I have to do is move my 401k into the bond-heavy fund right now and then back into the stock-heavy one when everything craters is what I'm hearing. It's what you're doing, right?
10 replies →
That's not what arbitrage means
>The money still comes from somewhere.
Can't they just be printed and massive funds borrowing money to buy shares?