There are some very helpful reminders for me here.....explanations for why the market these days is miss-pricing so many things so badly .....I can get caught from time to time when I start thinking that some common sense is going to return ....and it explains why consciously and unconsciously I am slowly shifting from trading stocks to trading indexes.....
I have a substack blog too but I make money trading, I'm happy to give away my ideas and if anybody trades after me, well, thats a plus
I know the post was sponsored by Simplify (their target is advisors), but is there an approach a passive DIY investor could take to realistically hedge against the worst case scenario for passive flows? I've given up after looking at the difficulty and cost of maintaining a hedge permanently in an individual portfolio. I may be mistaken but the cure looks worse than the disease.
Great summary & video! (I actually posted this comment on YT but figured a discussion here could be easier to follow):
I didn't have much insight into market behavior before (the comment about active funds just trading among themselves reveals a lot about underlying structures). I saw it as a shift in price-setting & market power - in some sense this moved away from investors looking for best investment opportunities and thus fulfilling their part in efficient capital allocation (whatever of that is real anyway); towards central banks providing the source of the whole passive stream and towards those who actually create the index that is the target of the passive.
I'm also wondering a bit what this means about short-sellers, hyped stocks etc, and how price corrections will actually come to pass in such an environment. Just as a speculation, I'm wondering if something like a reverse flash-crash can happen - like a runaway price increase, because of some weird interactions between market participants on autopilot in a stock market with less and less volume/liquidity.
There are some very helpful reminders for me here.....explanations for why the market these days is miss-pricing so many things so badly .....I can get caught from time to time when I start thinking that some common sense is going to return ....and it explains why consciously and unconsciously I am slowly shifting from trading stocks to trading indexes.....
I have a substack blog too but I make money trading, I'm happy to give away my ideas and if anybody trades after me, well, thats a plus
I know the post was sponsored by Simplify (their target is advisors), but is there an approach a passive DIY investor could take to realistically hedge against the worst case scenario for passive flows? I've given up after looking at the difficulty and cost of maintaining a hedge permanently in an individual portfolio. I may be mistaken but the cure looks worse than the disease.
Great summary & video! (I actually posted this comment on YT but figured a discussion here could be easier to follow):
I didn't have much insight into market behavior before (the comment about active funds just trading among themselves reveals a lot about underlying structures). I saw it as a shift in price-setting & market power - in some sense this moved away from investors looking for best investment opportunities and thus fulfilling their part in efficient capital allocation (whatever of that is real anyway); towards central banks providing the source of the whole passive stream and towards those who actually create the index that is the target of the passive.
I'm also wondering a bit what this means about short-sellers, hyped stocks etc, and how price corrections will actually come to pass in such an environment. Just as a speculation, I'm wondering if something like a reverse flash-crash can happen - like a runaway price increase, because of some weird interactions between market participants on autopilot in a stock market with less and less volume/liquidity.