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Why would index fund investors be any more likely to cash out on falling equity values than investors in actively managed funds or single equities? If anything
by dcolkitt 4y ago
Why would index fund investors be any more likely to cash out on falling equity values than investors in actively managed funds or single equities?
If anything it seems quite the opposite? Index fund investors know the market always goes back up on long enough time frame. Investors in actively managed funds have to continuously question whether their manager is incompetent.
- Jensson 4y agoIndex funds invests in the whole economy, so when they are overhyped people will over invest in the whole economy, that is the main danger. But yes, the invest/cash out cycle is probably longer than other kinds of investments, so wee see a longer bull run than normal but likely we will also see a longer/deeper recession than normal for the same reason.
- doktorhladnjak 4y agoNot every index fund invests in the whole economy. Lots of ETFs and mutual funds out there targeting specific indexes that represent only parts of the market. Even relatively broad ones like the NASDAQ, or specific ones for ultra short treasuries.