Bubble in Passive Investing?

Discussion of the Stock portion of the Permanent Portfolio

Moderator: Global Moderator

Post Reply
User avatar
Xan
Administrator
Administrator
Posts: 2264
Joined: Tue Mar 13, 2012 1:51 pm

Bubble in Passive Investing?

Post by Xan » Thu Aug 29, 2019 2:24 pm

"The Big Short’s Michael Burry Sees a Bubble in Passive Investing":

https://www.bloomberg.com/news/articles ... -investing

Thoughts?
User avatar
Tyler
Executive Member
Executive Member
Posts: 1753
Joined: Sat Nov 12, 2011 3:23 pm
Contact:

Re: Bubble in Passive Investing?

Post by Tyler » Thu Aug 29, 2019 2:27 pm

I really enjoyed Josh Brown's rebuttal. In short, passive investing is nothing new -- it's the historical norm.

"The Real Bubble Has Always Been in Active Management"

https://thereformedbroker.com/2019/08/2 ... anagement/
PortfolioCharts.com : Find a portfolio to love
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 1751
Joined: Sun Sep 16, 2012 5:28 pm

Re: Bubble in Passive Investing?

Post by Kriegsspiel » Thu Aug 29, 2019 2:34 pm

I'm not a passive investor! I let the good people at the Center for Research in Security Prices and FTSE Russell pick companies for me.
To die, to sleep
To sleep, perchance to dream; ay, there's the rub
For in that sleep of death what dreams may come
User avatar
Xan
Administrator
Administrator
Posts: 2264
Joined: Tue Mar 13, 2012 1:51 pm

Re: Bubble in Passive Investing?

Post by Xan » Thu Aug 29, 2019 4:42 pm

Great article, Tyler.
User avatar
Smith1776
Executive Member
Executive Member
Posts: 224
Joined: Fri Apr 21, 2017 6:01 pm

Re: Bubble in Passive Investing?

Post by Smith1776 » Sat Aug 31, 2019 6:00 pm

I'm quite conflicted on the issue because I quite like Michael Burry. However, I think that may be cognitive bias because I think I "know" him thanks to Christian Bale in the movie.

On the other hand, I did read up on him extensively after watching The Big Short. His insights into value investing and his old forum posts were quite great.

I don't buy the premise there's a bubble in passive investing, but I probably lend that viewpoint slightly more weight coming from him...
V = E * (8.5 + 2G)
User avatar
Xan
Administrator
Administrator
Posts: 2264
Joined: Tue Mar 13, 2012 1:51 pm

Re: Bubble in Passive Investing?

Post by Xan » Sun Sep 01, 2019 4:13 pm

Smith1776 wrote:
Sat Aug 31, 2019 6:00 pm
I'm quite conflicted on the issue because I quite like Michael Burry. However, I think that may be cognitive bias because I think I "know" him thanks to Christian Bale in the movie.

On the other hand, I did read up on him extensively after watching The Big Short. His insights into value investing and his old forum posts were quite great.

I don't buy the premise there's a bubble in passive investing, but I probably lend that viewpoint slightly more weight coming from him...
Past performance is no guarantee of future results!
boglerdude
Executive Member
Executive Member
Posts: 389
Joined: Wed Aug 10, 2016 1:40 am

Re: Bubble in Passive Investing?

Post by boglerdude » Sun Sep 01, 2019 11:49 pm

Nothing wrong with indexing, unless its something indirect like people thinking stocks are safe now because they cant lose it all on a single bankruptcy. And Im not sure PE measurements are adjusting for buybacks. There is a persistent human bias to not want to buy companies with bad press (value). But then, if everyone knows that, they'll overpay for value. Vanguard small value is PE 24, total market is 24.5. Value doesnt look like a bargain.

https://www.reddit.com/r/investing/comm ... bubble_in/
Post Reply