As you know, we're big fans of passive investing — it's simple, low-cost, and it works. But with passive funds now making up …
source
As you know, we're big fans of passive investing — it's simple, low-cost, and it works. But with passive funds now making up …
source
Input your search keywords and press Enter.
30 comments
Read Dimitri’s paper here: https://personal.lse.ac.uk/vayanos/Papers/PIRMF_RFSf.pdf
📈Here’s my free investing course:
https://makingmoney.email/investing-course-video
Wait till everyone tries to leave out of a very small door. It will be fun to watch.
The ringing is annoying
I'm a pactive investor, I keep drip feeding between three ETFs but don't take anything out of any of them, I weight my drip amongst them on a weekly or even daily basis, I'm only talking a few quid.
Just wanted to say thanks for putting these videos together. I’m the same generation as you, and as you know, we never got taught this stuff in school, so it’s really helpful to hear these interviews. It’s crazy that the UK education system doesn’t cover finance, but the more I’m learning through discussions from the likes of yourselves, the more confident I feel about being able to teach my daughter how it all works when she’s a bit older. Keep up the great work chaps!
Great interview but too much laughing and interrupting the guest.
This video is 🔥. Your message is strong, and with tighter editing (like smoother cuts, captions, and engaging b-roll), I can see it pulling in way more views. I’m a video editor and I’d be excited to collaborate if you’re open.
Passive investing is effectively a free rider problem. Imagine the market structure is the other way round – almost everyone (99%+) of funds are invested passively. Practically this means all indexed companies will be valued the same. No one is putting more money into A vs B, and therefore the demand for all shares in the index is the same.
Someone then comes along the goes "hey I've got this brilliant idea, I'm going to put more money into the firms that pay higher dividends, or generate more growth or have a higher book cost." This new "active" strategy would cost more since it requires people to do more due diligence on profits and earnings and yields, but delivers amazing returns because it actually starts to distinguish good firms from bad ones. Thats the price discovery effect.
At the moment passive is so successful because 40% of the money is still doing price discovery work and acts as a signal to everyone else.
The risk being highlighted here is what happens when the price discovery active firms are such a small % of the market they cease to influence direction.
very interesting thanks!
As more people go passive it adds inefficiency into the market. All of these active investors have been belly aching for years about passive investing, because people aren't paying for them to under perform the index with fees included. They won't be complaining when their are more opportunities to be had because of passive investing, and if they aren't good enough to take advantage of the opportunities in front of them others will benefit, and will be able to persuade others to start active trading, so a balance will be found between active and passive investing. Human nature is going to put a cap on the amount of people passive investing in the country.
Passive investors have been calling active investors bluff for 70 years and they have yet to show outside of less than 1% of active investors that their stock evaluations and assessments of the direction of the market is anything more than a glorified tarot card reading. All of the bad active investors are going to be weeded out, and as the good ones thrive it will attract more people to them. Also I think a lot of passive investors like myself are going to find fiduciaries to handle their money when they retire, which will add a bit more activity to their portfolio vs when they were in the wealth acquisition phase. Even if it's just phasing out equities into more wealth preservation type assets.
He has a horrific accent! Look, if I ever had to speak English to an audience, I’d get an interpreter. 😜
Thank u!
There are plenty of active investors to find the market price. For a long term investor those daily fluctuations should be of no interest.
So basically active traders gives big firms data on the general agreed price of a stock and without active traders people would just be mindlessly funding big companies.
54:51 why not to do that? i dont understand??
25:00 and whats wrong if i buy sp500 and microsoft? sp500 gives guarantee, microsoft potentially gives more profit, but is more risky. that is correct form of investing. u buy few companies for which u feel they are good value, id buy microsoft cos i use their products my whole life and they are into ai heavily, they are not going anywhere but up.
ideal form of "passive" investing is to invest , leave 10 years then withdraw little as u need as a form of pension.
if u r 100% passive it means u lose all ur money, u threw away all ur money. its the same as if u burnt cash. u gotta withdraw at one point. in 10 years or so.
Is the relevant distinction not active v passive but those who buy based on a sound analysis of a companies worth v those who don’t? The efficient market hypothesis relies on the former to set the price. If the proportion of people in this category falls to low, the market will not be efficient, some stocks will be persistently overvalued and go into a bubble. A recent example of this is the bubble in CBA in Australia. Index funds appear to have played a significant role in putting CBA into an upward spiral.
The buzzer is rude and annoying. Please find another way to do it
I want to enlighten you about other things that determine how people invest. I was born in 1980. I am older than The Internet. When I was a youngster my parents forced me to go to Christian Schools. They said things to us like: Do not purchase hygiene products from Johnson and Johnson because there is evidence that this company gives money to a Satanic Church run by Anton LaVey.
Children and gullible and naive adults will not invest in companies just because of rumors they heard about it.
I am a Christian but I am not going to turn my back on hygiene products. I spent my first 30 years of my life as a Atheist or Wiccan.
My mother was a Christian but my father was an Atheist.
Active managers may find it easier to find mug clients amongst retail customers than among the institutions, who are more aware of the power of costs.
I've done One year investing… S&P 500 total profit is 2.97%. also vanguard all world 2.45% not exactly what everyone says it is up til now. We live in hope!
I think its pretty weird he is worried about investors not wanting to invest into the smaller stocks, but that is because majority of businesses don't make it. Investors invest in bigger stocks because they have products that are demand and they them selfs like, forexample Tesla both enviromentally possitive impact and in huge demand, he knows how to hire one of the best staff in the world and their marketing stragety is top tire. This man speaks as if he does not have a bachelor in business, its known that research show majority of firms don't survive.
Factors like policy of the country the firm is based in, transparency of that country, the education of their staff, their products are not really serving the market nore interest into improving it, marketing strategy not good. And their managers often or driven by short term income to put in their pockets. Investors should not invest in those company's and it would be stupid.
I think it's not correct to call S&P500 (for example) index funds passive. These funds constitute active bets on the US market and these active bets have lead to massive overvaluation of US firms. It's also a momentum fund as it sells losers and buy winners. Actively allocating to momentum is also not a passive strategy; it's a momentum strategy.
I still don't know which s and p 500 to invest in! VUG or VUSA?
So many scammers in the comments, it's actually insane. Wtf is going on
I like a general passivity, and then picking stocks during downturns for short term gains.
If this guy thinks Elon is a Nazi, he's probably too restarted for stocks.
People calling this boring are in the wrong arena, this is as good as it gets in terms of learning. if you just want to gamble rather than learn about investing, go bet on football games.