Uccmal Posted April 25, 2017 Share Posted April 25, 2017 Article by Joe Nocera in Blomberg: https://www.bloomberg.com/view/articles/2017-04-25/index-funds-are-finally-sexy-what-a-shame "ETFs have gathered more than $2.7 trillion in assets today, of which around $400 billion is held in the three biggest S&P 500 ETFs (one of which is Vanguard's). But as SeekingAlpha noted recently, in March "$484 billion worth of these ETFs changed hands" — a turnover of 121 percent in one month. "This is not the action of buy and hold investors," the author concluded dryly. Indeed, it’s not. If you look at fund flows, you’ll see that when the market dips, as it did early last year, money pours out of index funds — only to pour back in once the market is climbing again. In other words, just as they had in the days of hot funds and hot stocks, too many investors are buying high and selling low. Except this time, they are doing it with index funds." When the market finally starts to correct index funds and etfs are going to amplify the correction. Just as this bull market has gotten way ahead of itself, the downside is going to be equally severe. Buffett and Bogle are right to recommend them but they work on the assumption that people will buy and hold an index fund forever. Their straw human behaves this way but real people acting on mass in a panic dont. Link to comment Share on other sites More sharing options...
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