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It'll be interesting to see how the enormous crop of new index fund investors behave during a market crash. Passive index investing has grown massively since 20

It'll be interesting to see how the enormous crop of new index fund investors behave during a market crash. Passive index investing has grown massively since 2008, and there has barely been a few months of consecutive negative monthly returns between then and now. The dogma says time in the market is better than timing the market, but it's easy to preach & believe such things when it gives you a 15%+ return each year. We'll see how strong the passive buy-&-hold ideology really is when the tide goes out. Which, it will - two more years and we'll have entered the longest uninterrupted period of economic growth in US history.

shelbyfinally 9y ago
> We'll see how strong the passive buy-&-hold ideology really is when the tide goes out. You already know the answer to that. Passive index investors will pull out in record numbers. I can't believe how many people I know who think "just put all your money in index funds and you'll be a millionaire when you retire." Now I don't have any better advice, but they only say this because of the gains they've seen in the last 7 years, like it's invulnerable. Even when I use my investing website's retirement calculator, it defaults to a 9% gain each year for the rest of my life. We're in uncharted territory. We could enter a 25-year stagnation. We could be at the beginning of the most prosperous time in history. Nobody knows. And nobody can predict it.
- maneesh 9y ago
  I can predict the future economy --- one where people earn a cryptocurrency where they earn token by hitting their healthy goals. Money has grown at an exponential pace in the last few years -- see money.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization/ Money is a bunch of bets against bets against bets. At the end of the day, the poorest person you know has air conditioning,a place to live, netflix, and poops in a toilet --- richer than the richest king of even 100 years ago, not to mention 1000, 2000, or even ~100,000 years ago when our species got started. When you learn to step outside the fishbowl, only then can you see water. When you step outside the story of money --- you see it's only a story. Between human beings. And then you can reassign meaning to money. It's just about to explode
  - jlj 9y ago
    Let's chat offline about the health based idea, I had a similar idea. Also classes of produce. Crypto currency of anything, enabling real time comparison shopping globally. Crypto FX.. all decentralized.
    - maneesh 9y ago
      Would love to chat offline but I don't see any contact info! Shoot me an email at maneesh@pavlok.com
- bostik 9y ago
  > You already know the answer to that. Passive index investors will pull out in record numbers. They're welcome to do that. Lemmings. I'll go the other way and get more of the index funds - not because they are "cheap" but because their value going down means the fraction of my investments held in the funds has decreased below what I think it should be.
- sharemywin 9y ago
  I don't think they will pull out. That's what's driving the prices so high. If everyone just lets money go from their check to the S&P 500. And most of that is flowing to only 10 companies. I think about it, if 3rd of the market is blindingly putting money in every month and a 3rd of the market isn't selling an equal amount it will send prices up. The problem is when it's time for Baby Boomers to retire en mass and they start pulling money out. Huge bear head wind. https://www.cnbc.com/2017/04/17/a-seismic-shift-is-happening-and-billions-are-pouring-into-these-funds.html https://www.cnbc.com/2017/04/17/a-seismic-shift-is-happening... http://www.zerohedge.com/news/2017-05-11/just-these-ten-companies-account-half-sps-2017-returns http://www.zerohedge.com/news/2017-05-11/just-these-ten-comp...
fallingfrog 9y ago
I think it will go up for a little while yet, because people are convinced that this is a zero risk investment with guaranteed returns- like real estate was supposed to be. I mean, how could all those companies in the index fund, with all that 401k money pouring in, go down at once? Seems impossible to imagine. That's why it's developing into a bubble. My worry is that some of these stock prices are being supported by leveraged buybacks at inflated prices, and when the economy goes into a recession, you might see a lot of companies declaring bankruptcy at the same time, being unable to repay those loans, leading to solvency issues with the banks that issued the loans. That's the nightmare scenario.
- sjg007 9y ago
  leverage and buybacks should be disclosed in the S1 right?

shelbyfinally 9y ago

> We'll see how strong the passive buy-&-hold ideology really is when the tide goes out. You already know the answer to that. Passive index investors will pull out in record numbers. I can't believe how many people I know who think "just put all your money in index funds and you'll be a millionaire when you retire." Now I don't have any better advice, but they only say this because of the gains they've seen in the last 7 years, like it's invulnerable. Even when I use my investing website's retirement calculator, it defaults to a 9% gain each year for the rest of my life. We're in uncharted territory. We could enter a 25-year stagnation. We could be at the beginning of the most prosperous time in history. Nobody knows. And nobody can predict it.

maneesh 9y ago
I can predict the future economy --- one where people earn a cryptocurrency where they earn token by hitting their healthy goals. Money has grown at an exponential pace in the last few years -- see money.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization/ Money is a bunch of bets against bets against bets. At the end of the day, the poorest person you know has air conditioning,a place to live, netflix, and poops in a toilet --- richer than the richest king of even 100 years ago, not to mention 1000, 2000, or even ~100,000 years ago when our species got started. When you learn to step outside the fishbowl, only then can you see water. When you step outside the story of money --- you see it's only a story. Between human beings. And then you can reassign meaning to money. It's just about to explode
- jlj 9y ago
  Let's chat offline about the health based idea, I had a similar idea. Also classes of produce. Crypto currency of anything, enabling real time comparison shopping globally. Crypto FX.. all decentralized.
  - maneesh 9y ago
    Would love to chat offline but I don't see any contact info! Shoot me an email at maneesh@pavlok.com
bostik 9y ago
> You already know the answer to that. Passive index investors will pull out in record numbers. They're welcome to do that. Lemmings. I'll go the other way and get more of the index funds - not because they are "cheap" but because their value going down means the fraction of my investments held in the funds has decreased below what I think it should be.
sharemywin 9y ago
I don't think they will pull out. That's what's driving the prices so high. If everyone just lets money go from their check to the S&P 500. And most of that is flowing to only 10 companies. I think about it, if 3rd of the market is blindingly putting money in every month and a 3rd of the market isn't selling an equal amount it will send prices up. The problem is when it's time for Baby Boomers to retire en mass and they start pulling money out. Huge bear head wind. https://www.cnbc.com/2017/04/17/a-seismic-shift-is-happening-and-billions-are-pouring-into-these-funds.html https://www.cnbc.com/2017/04/17/a-seismic-shift-is-happening... http://www.zerohedge.com/news/2017-05-11/just-these-ten-companies-account-half-sps-2017-returns http://www.zerohedge.com/news/2017-05-11/just-these-ten-comp...

fallingfrog 9y ago

I think it will go up for a little while yet, because people are convinced that this is a zero risk investment with guaranteed returns- like real estate was supposed to be. I mean, how could all those companies in the index fund, with all that 401k money pouring in, go down at once? Seems impossible to imagine. That's why it's developing into a bubble. My worry is that some of these stock prices are being supported by leveraged buybacks at inflated prices, and when the economy goes into a recession, you might see a lot of companies declaring bankruptcy at the same time, being unable to repay those loans, leading to solvency issues with the banks that issued the loans. That's the nightmare scenario.

sjg007 9y ago
leverage and buybacks should be disclosed in the S1 right?