In response to the equity market’s growing concentration of Big Tech firms, S&P has announced that it will reduce the weightings of the biggest market leaders in proportion to their capitalization if they surpass certain size thresholds in key industry benchmarks.
I just heard about this on a podcast and the question was if this is contributing to latest stock sell off.
After reading the article I don't think it would apply to a total market index or sp 500 index but I am not sure. Either way it sounds like it will limit the high flying tech stocks from getting higher allocations in technology index funds.
Anyone concerned for their index funds? Will this give a reason to start using active funds?
Lotsa bux are made front-running when indexes are forced to sell. If people didnt trade Wall st would go out of business. Insider trading should be semi-legal so that its obvious to people they have no advantage.
If a 60 year old uncle had retired in 1980 with $400K, drawing a $20K/year SWR applied to a PP, they'd have been broke by 2020. If instead they'd invested in stocks and died recently they'd be leaving a $24 million portfolio value.
Which nephew/niece would you prefer to be as the primary beneficiary?
Or perhaps one where they'd opted for a 50/50 split of the two rather than either choice alone.
That's why you don't just look at TWO cherry-picked cases, you either let a Monte Carlo simulate 1000s of cases (using the admittedly faulty assumption that portfolio returns are normally distributed and can be described by STD DEV and MEAN), or you look at actual historical returns at PortfolioCharts.com (Tyler) to see what the "frontier" of safe withdrawal rates are.
Permanent Portfolio and Golden Butterfly are the best SWRs of the lazy portfolios. Assuming you have enough assets to start with, PP/GB will make you the happiest, but not your heirs.
Your heirs would like you to go 100% equity, but then if it blows up and you end up living with them, they won't like that either.
The worst ever year to retire? Not 1929, and not 1999 thus far (many of the the retirees are still alive, the experiment is not quite over)... the worst we know of was 1966. Because the equity market peaked late 1960s and staginflation in the 1970s. Stagflation also happens to be incoming as of this point in time because tariffs and forcibly removing people from the US workforce and massive Treasury issurance crowding out priate borrowing and bond market demanding higher long term rates. And are we at a stock market peak? Hmmm. Maybe.
