Where are invested dollars coming from?

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catnapper
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Joined: Tue Jun 18, 2019 3:59 am

Where are invested dollars coming from?

Post by catnapper » Tue Aug 13, 2019 9:54 pm

newbie question,

I noticed ITOT had $19B Net Assets in early April and today it holds $21.5B. Same story for others I looked at (Fidelity, Vanguard's stock index funds).

Also, almost everything else appears to be up since then, too - bond index funds & gold.

My question is, where is the money coming from? Where was it invested before?

When I look at portfolio visualizer the only asset classes I see have dropped in the last year are commodities and international, is it simply money flowing from those, to US Stocks+Bonds?

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dmcmahon
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Re: Where are invested dollars coming from?

Post by dmcmahon » Tue Aug 13, 2019 9:57 pm

It needn’t come from anywhere. If you and I agree to exchange some shares of XYZ Corp. at a higher price, then no net dollars have flowed into it and yet every share is repriced upwards

daca
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Re: Where are invested dollars coming from?

Post by daca » Tue Aug 13, 2019 10:12 pm

Throwing some figures into this mix for consideration:

For ITOT, I'm guessing part of the $2.5 billion is attributable to price increases, but also there is a measurement called net inflow/outflow. During the past week (8/6 - 8/12), ITOT had an inflow of $665 million, probably from other funds and also from new contributions into retirement funds, etc.(https://www.etf.com/etfanalytics/etf-fund-flows-tool)

Lee_WSP
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Location: Arizona

Re: Where are invested dollars coming from?

Post by Lee_WSP » Tue Aug 13, 2019 10:28 pm

dmcmahon wrote:
Tue Aug 13, 2019 9:57 pm
It needn’t come from anywhere. If you and I agree to exchange some shares of XYZ Corp. at a higher price, then no net dollars have flowed into it and yet every share is repriced upwards
Yup. If everyone tried to sell their shares are the same time, all the shares would be worthless. It's all actually a mind game. :beer

I wish I was being sarcastic, but that's actually the reality of everything. It's only worth what we think it's worth.

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whodidntante
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Re: Where are invested dollars coming from?

Post by whodidntante » Tue Aug 13, 2019 10:37 pm

catnapper wrote:
Tue Aug 13, 2019 9:54 pm
My question is, where is the money coming from? Where was it invested before?
We don't know exactly because trading is anonymous and we (you and I) can't monitor money transfers among various financial institutions in the world. But you can get a clue somewhat by looking at bond yields (lower suggests inflows), ETF and fund flows, and a bunch of economic metrics I will never understand.

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whodidntante
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Re: Where are invested dollars coming from?

Post by whodidntante » Tue Aug 13, 2019 10:42 pm

Lee_WSP wrote:
Tue Aug 13, 2019 10:28 pm
I wish I was being sarcastic, but that's actually the reality of everything. It's only worth what we think it's worth.
Yep. In 1929 in here in America there were some awful days were price discovery basically fell apart, in that there were not enough buy orders at any price. That's not really an issue by itself, and you'll see it on any given trading day with microcap stocks. But it was combined with intense "sell everything NOW!!!" phone calls to brokers from some very wealthy people, and margin clerks demanding the same thing. To get liquidity the price had to crater.

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