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There’s been a pretty widespread consensus growing in recent years around buying low cost index funds and holding them for the long run. In crises of the past,

There’s been a pretty widespread consensus growing in recent years around buying low cost index funds and holding them for the long run. In crises of the past, people would panic sell, which would create a vicious downward cycle. I wonder if what’s going on is that everyone is just riding the market and content to see their stocks dip in the short term, knowing it’d only be temporary. If that is the case, then you also have to wonder what this will do to the long term market. If everyone is only buying and holding (except when they retire), then the market can’t really go down. Or can it?

DoingSomeThings 6y ago
This is a fascinating thought. I suppose the key is 'everyone'. Passive investing is premised on the idea that markets rise. And markets rise based on someone providing proper valuation to the stocks in the market. If there's no one doing the picking, does the system fall apart? Possibly consumer, buy-and-hold investors are out-influencing Wall Street traders? I find that hard to believe, but it does seem like a long-term possibility.
toast0 6y ago
The market had a big dip in March, so it can go down. I imagine there was plenty of panic selling then. The Federal Reserve did a lot of interventions and what not since then, though.
helen___keller 6y ago
> If everyone is only buying and holding (except when they retire), then the market can’t really go down. Or can it? If a recession is bad enough that people have to liquidate investments to pay the bills, investment mentality is irrelevant. As it happens, in this particular recession, office workers who may have money in the market are generally not doing too bad because they can continue to work remote. > (except when they retire) In theory, if the amount of dollars being liquidated through retirees is greater than the amount of dollars being invested by workers (when the entire boomer generation has retired), this could imply that markets go down.

DoingSomeThings 6y ago

This is a fascinating thought. I suppose the key is 'everyone'. Passive investing is premised on the idea that markets rise. And markets rise based on someone providing proper valuation to the stocks in the market. If there's no one doing the picking, does the system fall apart? Possibly consumer, buy-and-hold investors are out-influencing Wall Street traders? I find that hard to believe, but it does seem like a long-term possibility.

toast0 6y ago

The market had a big dip in March, so it can go down. I imagine there was plenty of panic selling then. The Federal Reserve did a lot of interventions and what not since then, though.

helen___keller 6y ago

> If everyone is only buying and holding (except when they retire), then the market can’t really go down. Or can it? If a recession is bad enough that people have to liquidate investments to pay the bills, investment mentality is irrelevant. As it happens, in this particular recession, office workers who may have money in the market are generally not doing too bad because they can continue to work remote. > (except when they retire) In theory, if the amount of dollars being liquidated through retirees is greater than the amount of dollars being invested by workers (when the entire boomer generation has retired), this could imply that markets go down.