[jl2718]

The original idea behind passive investing was to use the pooled intelligence of many traders guessing the value of cr I think we’re beyond that. Most traders are just trying to get a timing edge over the indices. This introduces the modern concept of passive investing as a positive feedback loop force-fed by monetary supply. The market seems to hate dividends and buybacks, preferring expansion or acquisition, but then what gives it value? It has to be its memetic ability to attract investment, and this can easily eclipse anything on the earnings statement. I’m not sure this can go on forever.

[floundy]

>The market seems to hate dividends and buybacks, preferring expansion or acquisition, but then what gives it value?

I've always thought of a stock as a claim on future dividends, but for most of a company's lifecycle they should have a better idea how to invest funds than returning them to shareholders. So ideally only mature large cap companies should pay dividends.

As far as valuations go, international stocks are far more attractive than US stocks right now.

Total US stock fund (VTI): 1.33% dividend yield, 25.1 P/E

Total international stock (VXUS): 2.94% dividend yield, 15.4 P/E

It's been my experience discussing with many US investors that they are loathe to hold any international stocks for a variety of reasons. Personally I think they will have their decade soon. The US market cannot continue eating the world market capitalization without commensurate outsized earnings growth to back it.

[humansareok1]

Can you explain how it's fundamentally any different from retail investors just buying and holding the SP500 Index Companies' stocks individually?

[TacticalCoder]

Yeah. Some are saying passive investment is the biggest bubble of all times. The P/E of so many companies, not just tech ones, makes zero sense.

Mandatory pension funds are a ponzi. And btw the EU is hard at work working on one atm: they re currently thinking hard as to how to capture the wealth of EU citizens and the latest iteration would be a mandatory fund to invest in... State sponsored companies. They ll oc course not be presenting it that way but that s what it is. Then they ll kick the can down the road for years or decades by forcing mandatory contribution from new taxpayers.

Ponzi / pyramidal / state-mandated shenanigans never end well.

FWIW that mandatory fund in the EU shall be used to finance the army, digital transition (supposedly to counter the US but actually to siphon taxpayers money into friends of politicians creating companies that ll never compete with SV) and... Ecology.

I'm not thrilled that in a few months I ll be forced to invest in that.

[exclusiv]

I agree and Michael Burry has warned about it. There's no real price discovery on these index funds. Money comes in - buy all in the fund regardless of any fundamental. And many of those stocks aren't that liquid so in an exit and a dump, they will get destroyed.

[Rinzler89]

Which EU countries do that?