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Michael Burry Predicts: INDEX FUNDS WILL COLLAPSE! (I Explain Why)

Discussion in 'Exchange Traded Funds (ETF)' started by twisted strategies, 22nd Dec, 2019.

  1. twisted strategies

    twisted strategies Well-Known Member

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    ( food for thought )

    one reason i am NOT very heavy on ETFs

    now if the market has a meltdown , i have a small selection of ETfs ( and LICs ) thati will be watching carefully ( assuming such ETFs and LICs are still in operation in the crisis )

    ( DYOR )

    i am slightly biased towards LICs ( as i think the fund-managers will be less likely to be forced sellers and possibily even opportunistic shoppers ) ( but am not particularly heavy in LICs either )

    PS i absolutely DISAGREE on 'no homework ' i put in AT LEAST a week on research and thinking into EACH ETF target ( and then decide to buy , ignore or watch for later )
     
  2. Hodor

    Hodor Well-Known Member

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    A load of rubbish IMO. The usual scare tactics.

    All these people will point out how correct they were come the next market crisis. Some will point the finger at ETFs/index funds which will have crashed too. All conveniently ignoring the holes in the arguments they make.
     
    twisted strategies likes this.
  3. twisted strategies

    twisted strategies Well-Known Member

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    i would like to see the theory tested properly , before forming an opinion

    ( assuming the ETFs stay operating ) it will be a guide of the majority of holders thinking ,

    will they react as if they held normal shares ( say MQG ) and RUSH to the exit

    will the 'market makers fearless buy all the offloaded stocks ( that the few buyers can not absorb

    remember an ETF trades very close to it's NTA ( portfolio value ) so if ( say ) BHP was to plummet the index fund would be obliged to reflect that drop ( while a LIC MIGHT consider scooping up the unwanted BHP .and not feeling the NTA hit as badly or quickly )

    are the majority of ETF holders only interested in increasing portfolio value , or are they REALLY interested in long term investing ( and be tempted to buy a handful more cheaper )

    currently ( in ETFs ) i hold ASIA , HVST ,IHD , QFN , MVB , SYI ,VAS and VHY ( and BBUS and BBOZ but they are different beasts )

    BECAUSE i use ETFs as a kind of insurance ( and combined are probably 10% of the portfolio ) i will see any broad market losses across the portfolio so will get some sort of reading of whats going on .... say the BIG banks are smashed i would look at extra MVB ( less likely QFN ) however if the fall was severe and widespread .. MVW and VAS would be candidates for early reassessment maybe ILC , or VLC others like STW would be considered as well

    cheers !!!

    it might be a bit stressful for me but i have some contingency plans ( which don't all involve the 'SELL ALL ' button )

    however the commentator does raise a valid point on the way ETFs are portrayed as 'easy and simple ' ( underneatth that CHESS statement is a LOT of moving parts and ETFs rely on the computers operating properly , in crisis as well )

    how savvy is the average ETF holder ( especially if they are the bulk of your portfolio )