09-04-2021, 11:51 AM
Any real believers in Michael Burry’s predictions on index funds?
<!-- SC_OFF --><div class="md"><p>I have been looking into it recently and I think he has a point. Index funds are extremely overvalued because they are too popular. People do not know what actual companies they own shares in, they just expect a crazy 7/8% return in a year. People will realize this, and eventually pull their money out, which could cause a chain reaction of stock prices dropping to the point where the whole economy could collapse. And if people do not realize, they still are subject to very unfortunate consequences if the stock market crashes from other bubbles like the tech bubble. With more people investing now than ever before, a crash could be 10x more brutal with nearly 50% of americans invested (20/30% of that being directly in index funds).</p> <p>I also think the worst outcome we could see is the collapse of smaller businesses, since an index fund crash/pullout would hurt small businesses that receive a large part of their funding and have most company stock included in index funds. An index fund collapse could put a lot of small businesses out, but big business will survive and get even bigger. From a market analysis point that would say to invest in big business once it crashes, but from a morality stance some of these companies are already way too big (Facebook, Amazon, Google, etc).</p> <p>What do you all think about this?</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Jimbaliah"> /u/Jimbaliah </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/ph93l0/any_real_believers_in_michael_burrys_predictions/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/ph93l0/any_real_believers_in_michael_burrys_predictions/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>I have been looking into it recently and I think he has a point. Index funds are extremely overvalued because they are too popular. People do not know what actual companies they own shares in, they just expect a crazy 7/8% return in a year. People will realize this, and eventually pull their money out, which could cause a chain reaction of stock prices dropping to the point where the whole economy could collapse. And if people do not realize, they still are subject to very unfortunate consequences if the stock market crashes from other bubbles like the tech bubble. With more people investing now than ever before, a crash could be 10x more brutal with nearly 50% of americans invested (20/30% of that being directly in index funds).</p> <p>I also think the worst outcome we could see is the collapse of smaller businesses, since an index fund crash/pullout would hurt small businesses that receive a large part of their funding and have most company stock included in index funds. An index fund collapse could put a lot of small businesses out, but big business will survive and get even bigger. From a market analysis point that would say to invest in big business once it crashes, but from a morality stance some of these companies are already way too big (Facebook, Amazon, Google, etc).</p> <p>What do you all think about this?</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Jimbaliah"> /u/Jimbaliah </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/ph93l0/any_real_believers_in_michael_burrys_predictions/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/ph93l0/any_real_believers_in_michael_burrys_predictions/">[comments]</a></span>Kind Regards R