Comments by "Samson Soturian" (@samsonsoturian6013) on "The Index Fund/ETF Bubble - How Bad Is It Really?" video.

  1. Dude, this video dates back BEFORE the Covid Panic. Nothing you see has anything to do with the theory discussed.
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  2. Active investors don't like being told they're wasting their time. Passive investors don't like being told which stocks to buy.
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  3. If there was a fund that did that, the existence of said fund would create correlation between them.
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  4. That would require a total exit from those funds, including in retirement accounts.
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  5.  @PhilippBlum  yes, but if passive index funds see 90% outflows, the rest of the market would too. Even if it didn't, arbitraging algorithm would sell short the whole market automatically
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  6. I think you mean ETNs, which are funds which don't actually own the index they track. They simply issue units and redeam them for the appropriate price. In theory, this is better for the issuer as, for instance, they could issue a 3x gold commodity and 3x inverse gold commodity ETNs. Since bets for and against gold will be roughly equal at any given time, the issuer can buy/short an appropriate amount of gold to hedge against price movements, and lend out the remaining money. In practice, ETNs have some weird risks. Usually these are small funds with little economy of scale so fund closures are frequent and often have little warning. They're also often tracking exotic or highly specific strategies where the risks are not always clear. I.E. I think there was one ETN that sold straddles on the S&P and distributed profits as a dividend, so some idiot dividend investor saw a 10% dividend on a diversified fund and instantly bought it.
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  7.  @Halbmond  well, I said that because levered ETFs aren't synthetic. Most of them use total return swaps, which is a fancy way of borrowing money.
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  8. He was ultimately right, regardless if gamblers and scammers drove the price up.
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  9. You've been losing money, haven't you?
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  10. "Et. al. is like the best scientist, his name is on all the papers." -Zefrank1
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  11. In that scenario an active trader or even an algorithm will step in an turn a profit by correcting it. The thing is: The fewer active traders there are, the more profitable it becomes.
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  12.  @frenchmarty7446  algorithmic traders make small risk free profits through arbitrage methods. For instance, if investors dump an ETF faster than it can be redeamed, then the ETF will trade at a discount to NAV (Net Asset Value). An algorithm will see this, buy the fund, short the stocks it holds, and correct that problem for a small profit. We saw how during the outbreak of war in Europe, traders either couldn't or wouldn't touch Russian assets, so Russian ETFs in the US traded at as much as 50% discount to NAV because there were no arbitragers. There's also statical arbitrage, convertable arbitrage, bond arbitrage, triangular arbitrage, and a bunch others that turn a progit by keeping the market sane and there are many funds that specialize in it.
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  13.  @frenchmarty7446  it sounds like I would make a tidy profit from the market correction, but that is because markets went crazy beyond my control. Yes, you see a lot of really weird stuff during "volatility spikes" and market crashes, which is why the best time to invest is always at the bottom.
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  14.  @frenchmarty7446  that's called a bubble, and right now there's no way to prevent human error from creating them.
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  15. Closet indexing like that is frankly best for both active and passive investors. Don't let your life savings depend on luck.
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  16. That's not the argument being made.
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