The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: LadyBug100 on December 17, 2018, 12:28:11 PM
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Just discovered the world of Mr. Money Mustache recently and have been madly reading all the blog postings and the forum postings in the last couple of months. This afternoon I came across this article on CNBC website: https://www.cnbc.com/2018/12/17/gundlach-says-passive-investing-has-reached-mania-status.html and wondering everyone's thoughts on it. I get what he is saying about capital preservation but it also comes across like he is whining because they can't charge all those fees if they can't get people to buy and sell constantly. Would love to hear thoughts and comments.
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Here's my thought: buy and hold passive index funds. Keep repeating.
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Bogle has discussed some issues that are creeping up with indexing and some problems that could/will occur if indexing becomes even more popular (catastrophe if everyone indexed).
I don't intend to retire, but I still have a retirement account in which I passively invest and I will continue to passively invest in my retirement account until or unless it doesn't make sense to do so.
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Gundlach's DoubleLine actively manages clients money and has more than $120 billion in assets under management, according to the firm's website.
Don't ask a barber if you need a haircut.
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Bogle has discussed some issues that are creeping up with indexing and some problems that could/will occur if indexing becomes even more popular (catastrophe if everyone indexed).
I don't intend to retire, but I still have a retirement account in which I passively invest and I will continue to passively invest in my retirement account until or unless it doesn't make sense to do so.
From what I understand he said, it sounds like there is not a major problem with indexing, but the ups and downs of the market could be worse due to indexing and cause more people to trade out of fear and hurt themselves. The buy and hold will still have the same returns over the long term. Another problem is bad companies may be able to hang in there much longer and keep getting capital because they are part of an index where in the past they could get purged fairly quickly, but that could be offset by good companies that stay afloat longer and have a chance to survive.
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From what I understand he said, it sounds like there is not a major problem with indexing, but the ups and downs of the market could be worse due to indexing and cause more people to trade out of fear and hurt themselves. The buy and hold will still have the same returns over the long term. Another problem is bad companies may be able to hang in there much longer and keep getting capital because they are part of an index where in the past they could get purged fairly quickly, but that could be offset by good companies that stay afloat longer and have a chance to survive.
I'm not sure if you're objecting to what I said and/or which part, but there are a lot of articles out there with his commentary on indexing. He is obviously a proponent, but has shared concerns about the changing dynamic. He also commented on the chaos that would occur if the majority (I can't recall the % he put on it, but possibly 75%+) indexed, hence my last statement on that.
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CNBC is an entertainment channel and should not be taken seriously.
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CNBC is an entertainment channel and should not be taken seriously.
How can you tell it is entertainment? ,... they don't have the E/I symbol like all the other kiddie shows.
https://en.wikipedia.org/wiki/Regulations_on_children's_television_programming_in_the_United_States
Really,
a)relax
b) start/keep buying low cost indexes
c) if you don't have any spare cash, build some up, then see b)
as to the "indexing is bad" part, do you really think that hundreds of thousands of financial sector brokers, analysts, hedge funds etc are suddenly going to discover or admit that "you can't beat the market" and flush their jobs? Price discovery just takes 2 contrary parties.
We, here on this very forum, a forum that espouses "indexing Uber Alles"can find enough parties to do price discovery for everyone, worldwide.
Even on this subforum, we get a lot of "I know you shouldn't time the market but......"
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There are plenty of professional traders, hedge funds, pensions, and internal bank trading desks to keep market valuations correct.
Bogle does bring up some valid points on corporate governance, but unless you have $10M+ I wouldn't worry about it, indexing will still be best for you.
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CNBC is an entertainment channel and should not be taken seriously.
How can you tell it is entertainment? ,... they don't have the E/I symbol like all the other kiddie shows.
https://en.wikipedia.org/wiki/Regulations_on_children's_television_programming_in_the_United_States
Really,
a)relax
b) start/keep buying low cost indexes
c) if you don't have any spare cash, build some up, then see b)
as to the "indexing is bad" part, do you really think that hundreds of thousands of financial sector brokers, analysts, hedge funds etc are suddenly going to discover or admit that "you can't beat the market" and flush their jobs? Price discovery just takes 2 contrary parties.
We, here on this very forum, a forum that espouses "indexing Uber Alles"can find enough parties to do price discovery for everyone, worldwide.
Even on this subforum, we get a lot of "I know you shouldn't time the market but......"
After the last financial crisis, it's been well known that CNBC is in the entertainment business and not the news business especially with shows like "Mad Money".
https://www.nytimes.com/2015/08/08/opinion/joe-nocera-on-the-cramer-takedown.html