Elon Musk and Cathie Wood knock passive index investing: say it’s gone too far
cnbc.com
cnbc.com
Cool, let's check how Cathie's active approach did in comparison. Surely they must have capitalized on that 400-fold TSLA appreciation that the index fund dummies missed out on.
Nope - https://www.cnbc.com/quotes/ARKK - same levels as it was in 2018. And much less than the S&P500 returns. Turns out that it's very easy to spot the 400x opportunities when you're looking back in time.
It might just mean that after doing something right, they did something wrong that more than cancelled it out. This is why it's hard to learn from experience.
For instance, right now, a lot of people may not understand the implications of inflation and sharply rising interest rates. Because people who were adults in the 70s are old and irrelevant, or deceased.
Musk and Wood have a point but for the majority of people, what are the alternatives? Playing the slot machines?
As a side note, I recently picked up "Local Dollars, Local Sense" by Michael Shuman. One of the takeaways so far is that regulations make it extremely difficult for people to invest in small to mid companies that are local to them. The laws all but force us into the jaws of Wall Street. Perhaps this would be an alternative if the regs were loosened up?
https://openlibrary.org/books/OL25087017M/Local_dollars_loca...
The S&P P/E is down to around 20, which corresponds roughly to a 3.5% return. That's reasonable for a low-risk investment, but about the limit. A few months ago it was more like 40, and it just stopped being a sensible value investment. (The P/E ratio has flaws as a metric, but it's hard to come up with one that's obviously better for a broad index.)
Somebody has to take higher-risk higher-reward investments in new companies to go IPO and absorb all that spare cash. And hopefully, somebody smart enough to avoid scams getting into the index funds -- that's presumably the SEC's job.
Yesterday absolute evil was represented by short sellers and Big Oil, nowadays it's BlackRock and Vanguard.
Saudis were great friends when prince M(Bonesaw)S expressed the intention of maybe taking Tesla private, then they were evil when they backpedaled, ironically they became good friends again when they decided to roll over their stake in Twitter.
People capitalizing on the goldfish memory of the avg. financial analyst and retail investor.
But it will end at some point. Problem is when these 2 fraudolent clowns go down, 4 new ones will emerge to take their place.
It's the gilded age of fraud out there.
I don’t have time or interest to watch things like a hawk. I suspect pretty much everything on the market is correlated which makes most switches less effective. And this sure sounds like “wah, people are not paying me to manage their money”. And if they’re paid by commission it’s doubly bogus.