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I read a lot of positive opinions in this thread about index funds. Consider for a minute how much money has been flowing into <= 500 companies due to S&P500 in
by alangibson 4y ago
I read a lot of positive opinions in this thread about index funds. Consider for a minute how much money has been flowing into <= 500 companies due to S&P500 index funds in the last decade.
My guess is that we're about to see a bubble pop over the coming recession that no one realized was there.
- mikeyouse 4y agoThere's very little money "flowing into" the companies on the S&P500 by virtue of their inclusion. Buying a share of Coca Cola doesn't give money to Coca Cola, it gives it to the previous 3rd party owner of that share. With the exception of new share issuances like IPOs, the share price of a company is mostly irrelevant to the cash position of that company.
- MuffinFlavored 4y ago> no one realized was there but we have data that S&P500 P/E has been elevated compared to history for quite a while
- brewdad 4y agoI don't know if it's a bubble per se or more like the Social Security system in the US. It will be interesting to see what happens to these index funds as the younger portion of Boomers and older Gen X retire and start drawing down their 401(k)s and other accounts. Older Boomers had pensions, so weren't as reliant on amassing personal savings for retirement, but that's far less common as you move into younger populations.