Seems like when it comes to investing advice, all of the big

We're likely in a bubble if that's what you're asking

>>1400941

Of course. You'd have to look no further than the P/E of any handful of stocks in any major industrial sector to see that. But what I'm looking for is the cause. Is the recent popularity of Average Joe ETF investing causing this bubble?

>>1400907
The market reacts emotionally, then corrects to something slightly more rational.

The trick is to know the emotional overreaction and whatever middleground it will stabilize on.

In general you're going to have a strong emotional response and panic price swing. Then the price will either stabilize backwards towards a reasonable price or will continue to move as the market fights through resistance.

>>1400953
It's all a reaction to prolonged 0% interest rates.

>>1400907

Yes, it does impact the price. Only a small percentage of ETFs have the volume needed, relative to the volume of the underlying, to influence prices.

There's particulars to the way ETFs actually function (baskets and creation units), but you can see it intra-day and over time.

Intra-day, you will see stocks that are left out of popular indexes (S&P, R2000) lag the price behavior of the included stocks. If they are more liquid stocks, they will catch up that day, less liquid ones usually only catch up at the end of the day or the next day.

In futures, you will see days when the futures is pushing the cash index, rather than the other way around.

These days it is subtle, but if you read about the 1987 crash and the portfolio insurance/dynamic hedging programs that LOR sold, it was huge. Market falls? Sell futures. The futures selling that all of LOR's clients are doing is pushing down the market? Sell even more futures.

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>>1400953
So is going long the market contrarian at this point?

If everyone knows we're in a bubble, then why aren't people selling/shorting still?

You're onto something real by pure intuition, OP.

Do some googling, there have been serious issues with the liquidity in major ETFs.

Jesus, the morons on this board....

Index funds and ETFs represent less than 30% of all mutual fund dollars, and less than 10% of all market-investment dollars. They're the tail wagging the dog.

Just because you hear a lot about them doesn't mean they move the markets. You hear a lot about them because they're the best way to invest in the markets, but, for better or worse, most people are still idiots. They still actively trade, they still believe in trends and momentum swings, they still believe in technical indicators, and they still believe that you can "git gud" at trading stocks.

Index funds and ETFs are the solution to the problem, but most people are just too stupid to take the cure.

just buy buy to lets

>>1402010
hahaha

10/10 post mate.

Also >>1401413
Just because you're in a bubble doesn't mean you're at or potentially anywhere near the top of it. What if the bubble keeps growing for 20 years?

The reality is is that investors will keep investing until the bubble pops. The best hedge fund managers in the world are nearly always making money off of bubbles popping or atleast maintaining their returns regardless.

I recommend if you're worried you study hedge funds and how their individual strategies got them through 2008.

A lot of people made money then that did nothing of the sort described in "the big short".