54 sats \ 1 reply \ @sb 24 Jul 2022 \ on: The index mindset - John Luttig bitcoin
"Everyone knows that “past performance is not indicative of future results”, but nobody believes it. In the case of index funds, it has been indicative. Index funds are a reflexive asset: because US funds have attained consistent returns, retirement money pours in, driving asset inflation and more buyers."
This is beautifully written.
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0 sats \ 0 replies \ @tomlaies 24 Jul 2022
driving asset inflation
Indices driving asset inflation has pretty much been debunked:
  • If it was true we should se a cliff in valuations compared to profits between S&P500 and 501-1000. But there is none
  • It also makes no sense. When markets become less efficient (which would be the case from index distortion) the incentivization to arbitrage these inefficiencies away becomes greater.
  • index ETFs are insignificant for price action compared to active hedge funds or banks moving in/out of individual stocks.
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