Scooter57 wrote:What impact will the presence in the market of all those indexed stock and bond ETFs and funds have on the theory that investing in indexed vehicles will beat choosing individual investments?
Scooter57 wrote:Do Models Always Fail When A Majority Applies Them?
Scooter57 wrote:The reason people are enthusiastic about indexing is because they believe that by investing in an indexed total market approach they [b]will end up with a decent gain over time[/b]. How many people here would stay the course if that meant going through 20 years of falling stock prices and dropping bond fund prices?
I worry that this kind of [bad] effect may hit all of us who bought into the index funds theory in the 1980s and 90s when the concept was not popular as it is now. Now we have an environment with retail investors flooding into indexed, automated ETFs in numbers never before seen.
In 2008 when retail investors sold out of the market they sold mostly stocks and stock-picking funds. What happens when they sell the whole S&P 500?
Any thoughts about this you'd like to share?
Scooter57 wrote:My point is that large amounts of indexing may destabilize the markets in ways that make "market return" unsatisfactory. That's because indexing links large blocks of assets so the market may move far more extremely than it did on the past.
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