Patrick Bateman from big short calls index funds next bubble

[Anonymous No.15491165]

>”The dirty secret of passive index funds -- whether open-end, closed-end, or ETF -- is the distribution of daily dollar value traded among the securities within the indexes they mimic.
“In the Russell 2000 Index, for instance, the vast majority of stocks are lower volume, lower value-traded stocks. Today I counted 1,049 stocks that traded less than $5 million in value during the day. That is over half, and almost half of those -- 456 stocks -- traded less than $1 million during the day. Yet through indexation and passive investing, hundreds of billions are linked to stocks like this. The S&P 500 is no different -- the index contains the world’s largest stocks, but still, 266 stocks -- over half -- traded under $150 million today. That sounds like a lot, but trillions of dollars in assets globally are indexed to these stocks. The theater keeps getting more crowded, but the exit door is the same as it always was. All this gets worse as you get into even less liquid equity and bond markets globally.”
It Won’t End Well
“This structured asset play is the same story again and again -- so easy to sell, such a self-fulfilling prophecy as the technical machinery kicks in. All those money managers market lower fees for indexed, passive products, but they are not fools -- they make up for it in scale.”
“Potentially making it worse will be the impossibility of unwinding the derivatives and naked buy/sell strategies used to help so many of these funds pseudo-match flows and prices each and every day. This fundamental concept is the same one that resulted in the market meltdowns in 2008. However, I just don’t know what the timeline will be. Like most bubbles, the longer it goes on, the worse the crash will be.”

Dr. Michael Burry known for the big short claims index funds are the next bubble. Discuss

[Anonymous No.15491201]

2008
>HOUSING ALWAYS GOES UP, LITERALLY FREE MONEY!
2019
>THE INDEX ALWAYS GOES UP, LITERALLY FREE MONEY!

[Anonymous No.15491212]

>>15491201
Isn’t the point of the S&P500 index to bet on the U.S economy and be diversified?

I’d like to see Mr. Burry have discussed this with Mr. Bogle if he were still around

[Anonymous No.15491219]

And hopefully..
2030
>BTC ALWAYS GOES UP! LITERALLY FREE MONEY!

[Anonymous No.15491251]

>>15491212
Well you're basically diversified into the US economy. There's plenty of other indexes, but as they get more intertwined, you have the same assets between indexes, and also indexes inside indexes. Inevitably it will all be connected

[Anonymous No.15491290]

>>15491251
True enough I would look at reits and s&p index but not mess with anything else but i didn’t think about the indexes becoming intertwined in this way. So where do I short? Should I just keep following Dr. Burry and speculate on stuff?

I don’t think he is going to be 100% right but I do think his opinion is worth a listen at least as long as he can justify it in a solid manner

[Anonymous No.15491394]

>>15491290
Well if I was investing in the Boomer market I would dollar cost average into out of the money puts on spx

[Anonymous No.15491413]

>>15491201
2019
>BITCOIN ALWAYS GOES UP, LITERALLY FREE MONEY

[Anonymous No.15491481]

>>15491413
>Comparing an emerging market to a bloated corpse
Stay poor fren

[Anonymous No.15491493]

>>15491212
Burry and Bogle were saying the same thing. passive investing distorts price discovery of major indices. Read the article, these dudes are right

[Anonymous No.15491539]

>>15491493
Bogle is the one who made passive investing popular though

[Anonymous No.15491545]

>>15491539
please go read the article, we all know that. DYOR

[Anonymous No.15491548]

>>15491413
I would say play safe and invest in safe and promising projects like Telecoin like I did and multiply the investment while relaxing.

[Anonymous No.15491563]

>>15491545
I read the article I have no idea what you’re talking about retard if you’re referring to another article it’d help if you linked it

[Anonymous No.15491577]

>>15491563
Then read more articles interviewing Jack Bogle before he died shitwipe

[Anonymous No.15492124]

>>15491481
>emerging market
>over 10 year old, no adoption
>never survived a recession
whatever you say

[Anonymous No.15492216]

>>15491413
Based retard

[Anonymous No.15492703]

>>15491201
FPBP

[Anonymous No.15492752]

huh, low liquidity. just like my shitcoins. he's saying can't cash out, just like cryto.

I trust him but you'd figure the guys who made these things up weighted their buy-ins so that low liquidity stocks are just a tiny portion of the index.

[Anonymous No.15492761]

>>15491165
Could I get a sauce on this statement?

[Anonymous No.15492777]

He makes a lot of sense. All over the Internet, people give advice to blindly buy index funds. When EVERYONE (normies mainly) is doing it, it’s going to end poorly. The problem is knowing when this happens, 1 or 5 or 20 years?

[Anonymous No.15492799]

>>15491165
BUT MY RETIREMENT CALCULATOR TOLD ME HOW MUCH I WAS GOING TO HAVE

[Anonymous No.15492800]

>>15491212
it artificially jacks prices up of companies that dont deserve it, it could be really bad

[Anonymous No.15492813]

>>15491212
>>15491251
I don't see how index funds can be considered a bubble. The funds owns shares of the underlying assets. Investors invest in the funds which in turn invest in the market. Some DO gamble a bit on futures and forex but most of it is in equities or bond markets. Funds aren't propped up by bad assets or by debt financing. If they dont have the money or capital they liquidate. It just sounds like a lot of butthurt active managers are tired of getting outperformed by brainless passive investment strategies.

[Anonymous No.15492814]

I also dont believe this "bubble" will pop like a 2008, more like a hemorrhage over a few months with people pooping their pants. the market will never react how you think it will, what a dynamic place to be in

[Anonymous No.15492817]

He's right. Stock P/E's have been getting insanely high and it's primarily index fund investing causing it. Another problem was cheap loans with which companies have done buybacks, and cheap loans making the bubble of non profitable companies that are expected to in the future get better profit (like netflix and tesla) to expand in stock price and operations way ahead of what would be normally sustainable.

There's way too much money looking for investment.

[Anonymous No.15493514]

>>15491165
Why isn't the /biz/ - Business and Finance board talking about this business and finance topic?

[Anonymous No.15493540]

>>15493514
because crypto is far more lucrative for far less work

/biz/ is about maximizing profits in the most ethical way with the littlest effort
fuck off with your boomer stocks

[Anonymous No.15493565]

>>15491577
Hey! Be nice.

[Anonymous No.15493585]

>>15493514
we've covered this stuff in the past. it's fun to talk about but at some point the horse is dead.

here's a neat thing that was posted recently

[Anonymous No.15493742]

>>15493540
Lmao no it isn't. Most cryptos are a blatant scam. Some are slightly less blatant.

[Anonymous No.15493759]

>>15492813
It's like a bubble in that it increases volatility because everything is so influenced by this wad of cash that interconnects everything. I would guess that as Boomers clock out of the workforce we'll see indices turn into a bloodbath, whether that will cuck its underlying companies seems very likely to me.

[Anonymous No.15494169]

I've always wondered what the 501th company looks like.

[Anonymous No.15494248]

>>15492752
They are just weighted on market cap or equal weighted. The system is not complicated, it's stupid simple.

Back to OP's point, I don't see any sings of it honestly. If you take a look at the P/E ratios, yeah they're higher than average but they're not crazy high like in 1998. Still not a smart idea to index, but I wouldn't short it.

[Anonymous No.15494266]

Fuck. /biz/ told me to invest all my profits from crypto into index funds. Now these are a bubble too? What the fuck do I do with my cash? It's just losing value day after day???

[Anonymous No.15494278]

>>15494266
Probably real estate

[Anonymous No.15494282]

I'm sure it will be fine, who gives a shit about this boomer.

>>15494278
>real estate is less of a bubble
>real estate is more diviserified
lmao

[Anonymous No.15494288]

>>15493585
Lmao, "hubris of the central bank". If you believe this you swallowed the narrative. They'll claim ignorance every fucking time.

[Anonymous No.15494292]

>>15494278
>>15494282
/biz/ told me 100% that real estate is a bubble and I kind of believe that actually. They told me index funds were much safer and that's where I should put my life savings though.

[Anonymous No.15494297]

>>15491201
/threaf

[Anonymous No.15494303]

>>15491413
I've told hundreds of normies to invest in bircoin for years. They all unironically tell me it's a scam that will go to $0 soon.

[Anonymous No.15494340]

What would Warren Buffet says?

[Anonymous No.15494347]

>>15494292
Index funds are much safer.

>More liquid
>Can easily globally diversify with index funds
>Less transaction fees
Own some REIT if you want.

[Anonymous No.15494473]

>>15492814
God, imagine the happiness in that man. Yeah, niggers might be trying to rob his store, but he gets to live in America and America allows him to purchase an M16 to ventilate those niggers as necessary. As opposed to living in some shit hut in Vietnam. Bliss.

[Anonymous No.15494587]

>>15494347
Who wants safety? We're all in our 20's, right now is the time to go big or go bust. Buy a bunch of apartments on floating rate mortgage, use then as bnbs and keep your fingers crossed hoping that interest rates stay low. In europe tho, rates are higher in the usa so this strat is not as good in the states. But as a yuropoor this is my gameplan for the next 10 years

[Anonymous No.15494591]

>>15494347
Also, big companies are mismanaged big time. Your money will be wasted on company retreats and ceo salaries.

[Anonymous No.15494601]

>>15494591
>Also, big companies are mismanaged big time. Your money will be wasted on company retreats and ceo salaries.

Stock returns historically are much higher than real estate though. And the problem is that even $1000 can be easily globally diversified because shares of a company are split up into millions and then bought up with money pooled together in a fund. - With real estate it would be impossible to say buy 200 homes and divide up their ownership 1000 ways easily.

And being a landlord of numerous properties is a lot harder than it seems, or paying a management company will eat into your returns heavily.

[Anonymous No.15494610]

>>15491413
It literally always does go up on a logarithmic chart