Most pension funds aren't heavily invested in ETFs (or other mutual funds). They're usually large enough that it makes sense to invest directly in the underlying securities.
Everyone has a prediction about what will cause the next major financial panic. Personally I think it will be triggered by property and casualty insurers who have purchased a lot of bonds where the credit ratings don't accurately reflect the true default risk. But who knows, it could be something else.
> how do you crash an ETF? I'm talking about broad index funds. Not stuff like ARKK
Any ETF's share value can "crash" if there are not enough buyers to purchase shares when they are trading below NAV (net asset value). It's worth a quick google to see what "market makers" or "authorized participants" do, but the thing to keep in mind is: if the market is kind of exploding in some major ways (think 2008) an ETF might not have a lot of buyers, even if its market price is well below its net asset value.
I have no idea how one would crash an ETF but I do wonder if someone could manipulate an index. I.e by somehow suggesting a larger fraction of free floating stock so that the index weights the stock higher than its actual share. That should create increased demand for that particular stock (fund companies buy it more) and thus raise its value over what the market would assign normally.
A US wealth/unrealized gains tax might trigger it, because it would likely create a cascade of forced selling, with the proceeds of sales getting burned as tax revenue for entitlement programs or debt payments rather than reinvested.
I invite you to watch Mike Green videos. In short, the current market rely on inflow of money to substain itself. P/E ratio can't increase forever. There will be a tipping point and if most of the money is invested based on an algorithm, it can unravel rapidly.
nradov|12 days ago
Everyone has a prediction about what will cause the next major financial panic. Personally I think it will be triggered by property and casualty insurers who have purchased a lot of bonds where the credit ratings don't accurately reflect the true default risk. But who knows, it could be something else.
sidewndr46|12 days ago
justin66|12 days ago
Any ETF's share value can "crash" if there are not enough buyers to purchase shares when they are trading below NAV (net asset value). It's worth a quick google to see what "market makers" or "authorized participants" do, but the thing to keep in mind is: if the market is kind of exploding in some major ways (think 2008) an ETF might not have a lot of buyers, even if its market price is well below its net asset value.
patall|12 days ago
groundzeros2015|12 days ago
anonporridge|12 days ago
triceratops|12 days ago
heisgone|12 days ago
https://www.youtube.com/watch?v=dkL4oz8iEg4