The financial market is like a religion you're forced to join. I really don't want to devote any brain cycles to thinking about The Market and What It is Thinking and How to Win Its Favor for My Portfolio, but like everybody else I have to. Passive investing is agnosticism.
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Replying to @vgr
You might find
@profplum99's thoughts on passive investing interesting if you haven't heard them before https://overcast.fm/+FhW99Q-KI https://overcast.fm/+Pefy8eGXE1 reply 0 retweets 2 likes -
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Replying to @vgr @profplum99
* Most (90%?) retirement flows
target date funds, by regulatory mandate that defaults for 401ks/etc meet certain parameters; one-variable investing (age); they assume a relatively recent stock/bond ~anti-correlation
* By his modeling, we're nearing passive dominance of active1 reply 0 retweets 1 like -
* In passive-dominated
volatility can become extreme in both directions. Imagine a 401k / ETF w/ 0 price sensitivity trying to buy from mostly price-insensitive non-sellers, or the opposite1 reply 0 retweets 1 like -
* Market cap weighting caused distortions in 2000s w/ tightly-held companies - if e.g. Bill Gates has huge ownership & isn't selling, indexes try to buy more than they possibly can, driving up price
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Float weighting (accounting for insider ownership, reflecting actual shares available to buy) is tricky. Ex: companies owning another company's stock, planning a buy-out, unwilling to sell
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I can't do all his insights justice. His appearances on
@realvision are fantastic as well1 reply 0 retweets 1 like
Thanks! I don’t think I understood much but am intrigued
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By trying to trade options (in very, very small size at first), I've been sucked into many finance rabbit holes in the last few years that I would never have found interesting previously. It's definitely a time commitment
Mike's Odd Lots episode above is pretty digestable0 replies 0 retweets 1 likeThanks. Twitter will use this to make your timeline better. UndoUndo
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