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He's right in the long sense... but I still think he's probably wrong today. But my problem with Burry's logic here, is that there's no "obvious" reason why in
by dragontamer 4y ago
He's right in the long sense... but I still think he's probably wrong today.
But my problem with Burry's logic here, is that there's no "obvious" reason why index funds are unsustainable at 20% of the market. What if the instability point is 40%? 50%? 60%? 80%?
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When only 20% of the market is buying-and-holding with index funds, it means that you're still facing 80% of active investors. (That is to say: 80% of your buys, and/or sells, are "against" an active investor).
Even then, I'm personally largely a passive investor. Still, I've moved my money to cash and bonds more heavily, as interest rates have risen. Its not like I've checked out my brain entirely. I still make decisions, just with index-funds as my instrument.
- Raidion 4y agoThe higher index funds gets as a % of market the more money (smart) active investing will earn you. So not only is there a balancing point, but (in theory) it should also be self balancing as the rewards increase as the balance gets more out of wack.
- andsoitis 4y ago> more money (smart) active investing will earn you. One problem is: which index fund and which active fund (which changes managers every couple of years anyhow) would you compare?
- TheCoelacanth 4y agoIf they could answer that, they would be making a killing in the market, not handing out free investment advice on the Internet.