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Burry argues that the nuts and bolts of actually implementing a large passive index fund break if enough people sell at once. The price will diverge from the ac
by skizm 6y ago
Burry argues that the nuts and bolts of actually implementing a large passive index fund break if enough people sell at once. The price will diverge from the actual underlying assets, causing more selling, causing more divergence, etc. If perfectly implemented (as in you actually get a slice of all companies in the index) then it would work as advertised. This isn’t the case in real life though.
- throw0101a 6y ago> Burry argues that the nuts and bolts of actually implementing a large passive index fund break if enough people sell at once. What seems to be happening is more inflows into index funds as time goes on from the articles I've seen. Most people, so far, seem to be keeping their heads and even loading up during downturns (buying low). The other thing with index funds is that they're often automated (e.g., monthly saving for retirement), so a lot of folks aren't actually looking at their portfolios (generally a good thing), and so are going on with their daily lives regardless of financial headlines.