see , index funds are not as simple as they seem in the sales brochure now in Australia Vanguard CAN lend shares to traders ( short-sellers i suspect ) to generate extra returns , now i haven't seen rival ETFs confirm they do this , i suspect some do next , overlooked in this video was index rebalancing ( 3 monthly usually ) , not always a problem UNTIL a tightly held stock like BKL or PME makes the ASX 200 ( YIPPEE for me when that happened two very nice boosts in net wealth ) now i lean towards the Micheal Burrey camp , in that there are several unknowns lurking ( but active funds will be tested also ) but then a burst bubble MIGHT tempt me to add extra index funds either new ones or top up existing holdings i am NOT saying run away from index funds , but please be aware , and have a couple of plans worked out just in case fear without a plan can be deadly DYOR
Is this video supposed to be against index investing? Nothing in the video points to any real issue with indexing. Sure index investing might not be perfect and could have some negative aspects. And yet this supposed flawed strategy still outperforms the majority of the active funds out there.
The video appears to debunk the index bubble argument similarly to this one. TLDR buy and hold index investors have very little impact on price discovery and if they ever did, institutional investors would quickly come in and take advantage of the mispriced assets
it is not index investing , i have a problem with , it is the over-selling of index investing , just like i would have of any other ' quick-fix' ( for all problems ) schemes . i suppose i expect too much from the sales staff ( and advertising folks ) , but selling 'simple' stuff to novices is always going to end in some tears , whether LICs , REITs or ETFs , does the fact an unemotional computer is making quick decisions make it any better than an experienced fund manager , both can make crucial mistakes under pressure . the index fund tracks the market very quickly , and that can produce flaws and bonuses but what of the investor who rarely checks the portfolio ( and market ) now i am not a parent but what of the parent who lets the child run free until the child elopes or the police knock on the door .. i also find it interesting to see what if 'Vanguard gets nuked ', but nobody asks the same question of say Blackrock , or are they thinking the US government would quietly bail them out BTW i hold both Vanguard and Blackrock products my issue is folks selling simple solutions to what could be life-changing consequences ( later in life ) glossing over the ( foreseeable) things that might go wrong. especially in the current economic climate
I'm sure there are spruikers out there selling the dream of easy riches. ETFs are absolutely no different to anything else in that respect. I suppose such spruikers are just trying to get a cut of what active managers have been selling for decades. Around here though, I can't think of a single poster advocating for ETFs as a "quick fix". They do advocate that ETFs are simple, yes, but always mention the journey is not easy. In the end though, it's up to the individual to decide if plain vanilla index ETF investing, which statistically is almost guaranteed to do better than any other method the investor chooses, is the right path for them or if they believe they can do what all the evidence suggests is virtually impossible to do.
members here , no but some professionals , and paid advertisers elsewhere absolutely for instance how many have read the full product disclosure forms ( and any accompanying white papers ) of any ETF at all ( let alone the changes since they bought the product ) i have for instance an information brochure from the TGA ( printed in December 2017 ) on medicinal cannabis in case i am prescribed it in the near future THIRTEEN SHEETS OF PAPER that told me nothing new except cannabis can be detected in my blood for 5 days after use ( fairly useless if prescribed this as a daily dose ) and THIS is supposed to pass as 'informed consent ' i knew most of this brochure in 2000 living next door to goddamn hippies , but the government formalized it using 13 sheets of paper .. 20 years later .. LOL now if this passes as official medical information ( and i got stuff all on the REALLY dangerous drugs i was prescribed , earlier except the caution of if i accidentally overdose .. RING THE AMBULANCE ) how good will be the the info on the average financial product ( unless you put in days of research ) remember many here are investing for their financial security in their later years ( when they can no longer earn a decent income ) investing decisions made now might be very important years later ..
I am a bit of a pessimist when it comes to investing in the share market. I have heavily invested in it in the past and will continue to do so in the future. I think the way to counter a heavy crash in etfs or any shares is to be prepared. Have cash available at all times excluding emergency funds 30% cash in a portfolio is a must in my opinion to counter the downward movements especially with so many overpriced shares if 2008 can happen to the most richest and powerful we can’t assume it won’t happen again
Yeah, well, if the ordinary punter doesn't have a buffer to cover their essential needs and goes mad with debt, they are going to get creamed big time. As for the "richest and powerful" I do hope they enjoy their Maccas's after having to forego the waygu by previously gorging on OPM.
have probably got the cash buffer up to 5% today ( with a little selective selling ) but many of the 'ordinary punters' have had their cash buffers ravaged by shutdowns and such ( and the disappearance of side-hustles and SOME would have decided to get a little aggressive on mortgage repayments i am thinking the 'ordinary punter is not awash with cash ( but hopefully has used any surplus cash wisely ) even if that includes saving for a residence IMO certainly a good time to have reduced debt ( even if the recovery does gone quickly )
