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> then they have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up overpriced stocks Only about a third of American stocks are
by JumpCrisscross 5mo ago
> then they have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up overpriced stocks
Only about a third of American stocks are held by passive capital [1]. Out of that, index funds are about 16%, and most of those in America reference the S&P 500, which has not yet announced whether it is changing its rules.
[1] https://alexchinco.com/double-what-you-think-it-is.pdf https://alexchinco.com/double-what-you-think-it-is.pdf
- vmbm 5mo agoSure, but it's the Americans that can least afford to be stood up as exit liquidity that have the most exposure here relative to their net worth. The ultra wealthy are going to be heavily overrepresented in the active basket. Meanwhile the folks lower down on the income scale are more likely to have their money in passive funds.
- chilipepperhott 5mo ago> The ultra wealthy are going to be heavily overrepresented in the active basket. Do you have evidence to substantiate this claim? My brief research has shown the wealthier the investor, the likelier they are to use a passive strategy.
- vmbm 5mo agoWhat levels of wealth are you referring to. I could believe that a doctor or lawyer is more likely to use passive strategies compared to a retail worker, who might just have a small Robinhood account for gambling. But the levels I am talking about are the ultra wealthy vs the middle class. Elon is not using passive index investing for any meaningful amount of his net worth. The vast majority of that is in his companies, which is not a passive investment. The same holds true most of the other ultra wealthy. And the top 1% controls about half the wealth in this country. So I think it is fair to say that they are going to be overrepresented in the active basket.
- fsuts 5mo agoA third is a lot 16% is a lot