The US stock market is gonna go pop
Discussion
VR99 said:
I've learnt this the hard way many times over yet still on various occasions have an urge to tinker around the edges. I use mainly passive funds/ETF's however find myself 'thinking' about my investments constantly...am I underweight EM, could add a smallcap fund, bit heavy on US........it's a deep deep rabbit hole. 'Fire and Forget' and the other variations of this concept are great but it's hard to simply forget!
This is where I like using something like FTSE Global All Cap if you're looking at pure equity exposure.It has all of that in it so I've managed to avoid those urges.
Slightly harder to get exposure to everything with many of the low cost multi-asset funds but they're there or there about enough IMO.
Panamax said:
It's great fun laughing at highly paid fund managers from a smug "average" position but, seriously, would management keep paying those people unless they thought they were doing something worthwhile? It would be much easier to fire them and pocket the difference.
Rationally, the sum of all the active managers must give the "average" return less fees, so employing them is overall a losing game for management.Phooey said:
A milestone 40000 DJ kiss today. Since 1st post - wow. The US economy is doing mighty fine. I doff my hat to JP.
I’d imagine very little to do with JP in a constructive managed way and everything to do with the levels of liquidity and the Democrats running massive deficits. The auctions are still being sucked up so to all the people who claim there will be a bond revolt, it’s not showing up yet but I guess everything has a tipping point. Any sustained weakness should be a concern but until then we’re all off to the races
DaveA8 said:
I’d imagine very little to do with JP in a constructive managed way and everything to do with the levels of liquidity and the Democrats running massive deficits. The auctions are still being sucked up so to all the people who claim there will be a bond revolt, it’s not showing up yet but I guess everything has a tipping point.
Any sustained weakness should be a concern but until then we’re all off to the races
I think they have 10yr and 20yr debt at something like 4.75%Any sustained weakness should be a concern but until then we’re all off to the races
It feels like a big gamble given USAs mode of operation for the last 16 years has been ease the bad times, good times, the very bad times, and tighten late… but be as dovish as possible and ease via fiscal means while doing so.
Who’d buy 10-20yr debt when there is a very strong chance you’ll never get it back?
Hence the stock market valuations.
It really is rock and hard place but people still haven’t noticed.
My guess is that the debt number the congress haggles each and every year is kind of a smokescreen for the public. Who really cares about 34tr or 56 tr $
The city of Miami is most likely worth that much anyway, or any other mega city.
How much does it cost to buy London?
I mean it's just a number and numbers are endless. It's the trust which makes it possible to print and print some more. No other country can do that. The $ is the official currency of 11 countries. Unique is their position and the worst part is they (the feds) know it.
The city of Miami is most likely worth that much anyway, or any other mega city.
How much does it cost to buy London?
I mean it's just a number and numbers are endless. It's the trust which makes it possible to print and print some more. No other country can do that. The $ is the official currency of 11 countries. Unique is their position and the worst part is they (the feds) know it.
Edited by NickZ24 on Friday 17th May 23:29
Panamax said:
VR99 said:
find myself 'thinking' about my investments constantly...am I underweight EM, could add a smallcap fund, bit heavy on US.....
And what's wrong with that? Better to be master of your own destiny than just follow the crowd.The argument for passive investment has been that it meets or beats "average". I don't know about you, but I don't want to be satisfied with average.
It's great fun laughing at highly paid fund managers from a smug "average" position but, seriously, would management keep paying those people unless they thought they were doing something worthwhile? It would be much easier to fire them and pocket the difference.
NickZ24 said:
My guess is that the debt number the congress haggles each and every year is kind of a smokescreen for the public. Who really cares about 34tr or 56 tr $
The city of Miami is most likely worth that much anyway, or any other mega city.
How much does it cost to buy London?
I mean it's just a number and numbers are endless. It's the trust which makes it possible to print and print some more. No other country can do that. The $ is the official currency of 11 countries. Unique is their position and the worst part is they (the feds) know it.
At $56 trillion, the debt would require interest payment which are too big for its current gdp so the USD would be close to collapse given it still needs sufficient funds to run the country. The collapse would come about due to other nations selling their holdings of USD given the increased risk of holding it as a safe haven currency.The city of Miami is most likely worth that much anyway, or any other mega city.
How much does it cost to buy London?
I mean it's just a number and numbers are endless. It's the trust which makes it possible to print and print some more. No other country can do that. The $ is the official currency of 11 countries. Unique is their position and the worst part is they (the feds) know it.
Edited by NickZ24 on Friday 17th May 23:29
The increased risk means increased interest rates to service and thus it would spiral out of control.
NRS said:
Because the management is pocketing the fees and making more bonuses as a result?
I think that's probably too cynical.We start from the reality that, by definition, all passive funds underperform the market. There are two reasons,
1. They are always behind the market so don't get in soon enough and don't get out soon enough.
2. Their fees.
Then we look at stock market returns which have averaged, say, 9% p.a. for which the passive investor pays, say, 0.1% in fees. Meanwhile the active investor is paying, say, 0.6% in fees - so about 0.5% difference.
Working with those figures, the market has delivered an automatic 8% return and the active fund manager only needs to beat that by another 0.5% before his fund is pulling ahead. That's not a big margin of difference; he only has to beat the automatic return by a small amount to justify his existence.
In addition the popularity of passive investing distorts the market by its very existence. That doesn't matter when "passive" is only a small proportion but it matters a lot of a large proportion of people in the market aren't actually treating it like a market at all. They only ever "follow the crowd" which can cause higher highs and lower lows. The active manager is able to take advantage of those while the passive fund is stuck, just tagging along behind.
Not all active funds beat the market and comparisons tend to me made against the average, albeit that can have many meanings. As an investor the secret is to avoid the dogs, something that's not too difficult to achieve. Organisations like Morningstar and Trustnet publish loads of free information about fund performance.
Here's an example. Blackrock Continental European, https://www.morningstar.co.uk/uk/funds/snapshot/sn...
Panamax said:
I think that's probably too cynical.
We start from the reality that, by definition, all passive funds underperform the market. There are two reasons,
1. They are always behind the market so don't get in soon enough and don't get out soon enough.
2. Their fees.
Then we look at stock market returns which have averaged, say, 9% p.a. for which the passive investor pays, say, 0.1% in fees. Meanwhile the active investor is paying, say, 0.6% in fees - so about 0.5% difference.
Working with those figures, the market has delivered an automatic 8% return and the active fund manager only needs to beat that by another 0.5% before his fund is pulling ahead. That's not a big margin of difference; he only has to beat the automatic return by a small amount to justify his existence.
In addition the popularity of passive investing distorts the market by its very existence. That doesn't matter when "passive" is only a small proportion but it matters a lot of a large proportion of people in the market aren't actually treating it like a market at all. They only ever "follow the crowd" which can cause higher highs and lower lows. The active manager is able to take advantage of those while the passive fund is stuck, just tagging along behind.
Not all active funds beat the market and comparisons tend to me made against the average, albeit that can have many meanings. As an investor the secret is to avoid the dogs, something that's not too difficult to achieve. Organisations like Morningstar and Trustnet publish loads of free information about fund performance.
Here's an example. Blackrock Continental European, https://www.morningstar.co.uk/uk/funds/snapshot/sn...
I think you’re find they’re full of past performance not future. You must be a multi billionaire by now?We start from the reality that, by definition, all passive funds underperform the market. There are two reasons,
1. They are always behind the market so don't get in soon enough and don't get out soon enough.
2. Their fees.
Then we look at stock market returns which have averaged, say, 9% p.a. for which the passive investor pays, say, 0.1% in fees. Meanwhile the active investor is paying, say, 0.6% in fees - so about 0.5% difference.
Working with those figures, the market has delivered an automatic 8% return and the active fund manager only needs to beat that by another 0.5% before his fund is pulling ahead. That's not a big margin of difference; he only has to beat the automatic return by a small amount to justify his existence.
In addition the popularity of passive investing distorts the market by its very existence. That doesn't matter when "passive" is only a small proportion but it matters a lot of a large proportion of people in the market aren't actually treating it like a market at all. They only ever "follow the crowd" which can cause higher highs and lower lows. The active manager is able to take advantage of those while the passive fund is stuck, just tagging along behind.
Not all active funds beat the market and comparisons tend to me made against the average, albeit that can have many meanings. As an investor the secret is to avoid the dogs, something that's not too difficult to achieve. Organisations like Morningstar and Trustnet publish loads of free information about fund performance.
Here's an example. Blackrock Continental European, https://www.morningstar.co.uk/uk/funds/snapshot/sn...
leef44 said:
NickZ24 said:
My guess is that the debt number the congress haggles each and every year is kind of a smokescreen for the public. Who really cares about 34tr or 56 tr $
The city of Miami is most likely worth that much anyway, or any other mega city.
How much does it cost to buy London?
I mean it's just a number and numbers are endless. It's the trust which makes it possible to print and print some more. No other country can do that. The $ is the official currency of 11 countries. Unique is their position and the worst part is they (the feds) know it.
At $56 trillion, the debt would require interest payment which are too big for its current gdp so the USD would be close to collapse given it still needs sufficient funds to run the country. The collapse would come about due to other nations selling their holdings of USD given the increased risk of holding it as a safe haven currency.The city of Miami is most likely worth that much anyway, or any other mega city.
How much does it cost to buy London?
I mean it's just a number and numbers are endless. It's the trust which makes it possible to print and print some more. No other country can do that. The $ is the official currency of 11 countries. Unique is their position and the worst part is they (the feds) know it.
Edited by NickZ24 on Friday 17th May 23:29
The increased risk means increased interest rates to service and thus it would spiral out of control.
b
hstewie said:
hstewie said: Passive funds are always behind the market? 
A passive fund is, by definition, a follower and not a leader. Theoretically the effect of this might be either positive or negative, but in the real world it's more likely to be negative. The fund will be late buying and late selling.Panamax said:
bhstewie said:
hstewie said: Passive funds are always behind the market?
A passive fund is, by definition, a follower and not a leader. Theoretically the effect of this might be either positive or negative, but in the real world it's more likely to be negative. The fund will be late buying and late selling.Wasn't it berkshire who challenged fund managers v tracker fund and they only beat the tracker 1 year out of 10 ?
Panamax said:
bhstewie said:
hstewie said: Passive funds are always behind the market?
A passive fund is, by definition, a follower and not a leader. Theoretically the effect of this might be either positive or negative, but in the real world it's more likely to be negative. The fund will be late buying and late selling.So a passive fund is not necessarily better or worse than the "leader"
egor110 said:
Panamax said:
bhstewie said:
hstewie said: Passive funds are always behind the market?
A passive fund is, by definition, a follower and not a leader. Theoretically the effect of this might be either positive or negative, but in the real world it's more likely to be negative. The fund will be late buying and late selling.Wasn't it berkshire who challenged fund managers v tracker fund and they only beat the tracker 1 year out of 10 ?
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