All of mkov_blank's Comments + Replies

My tentative playbook/recommendations for this scenario:

 Long homebuilders (ETFs: ITB, XHB; pair against short SPY if you want to be beta-neutral)
Long gold/gold miners (ETFs: GLD, GDX, GDXJ....)

This is a super difficult question. I'd be hesitant to immediately jump to long vol or flight-to-safety trades as offering the best reward-to-risk here.

 Another March-style liquidity crisis seems much less likely, given we have a better understanding of COVID as a medical condition, of the nature of its economic impacts, and--perhaps most importantly--how ... (read more)

  Wouldn't this make the long long-term treasuries attractive?

Good point and indeed indexing played a prominent role in the late 90s tech boom; it was a broad market phenomenon, in contrast to the idea that it was a micro-speculative frenzy contained to things like zero-revenue IPOs.

However, here I’ll expand on the meta-contrarian “bubble” point and offer that the dot com boom was not a case of markets gone haywire. I think we had a case for real technological prospects coupled with a market buying into the expectation that the Greenspan Fed was capable of providing nominal stability over the long-term.

It perhaps ser... (read more)

tl;dr: YES. But it also depends what you mean by 'good investment'

First, we can look at the claim that passive investing is a 'bubble.' Among those calling "Bubble!", I see two separate groups making two slightly separate claims.

One group claims that incessant inflows of passive money are inflating prices of the largest stocks (AAPL, MSFT, GOOG etc.) which make up the largest part of cap-weighted indices such that they trade substantially away from an equilibrium fair value. 

I think these claims are quite dubious. Prices are set by the marginal trade,... (read more)

I don't agree and would be interested in evidence for this. Have a look at what happened in 1999-2000 and see if you still think this. Investors moved en masse into hot tech funds, many "index" funds. The fund managers were to a large degree helpless as they had to follow fund mandates. Fund managers who stood aside as the madness grew lost funds under management rapidly. "Indexing" is not actually indexing if you don't own the whole market. That would include stocks, bonds and real estate in proportion to market value. You could start with an all world index fund like this and add an international fond fund and some get exposure to real estate all over the world (most REITs are more bond-like than real estate like). If you are, say, in the S&P 500 only or over-weighted to the NASDAQ you are not indexing.