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Podcast: "Greatest Bubble Ever (Passive ETF Investing)" with Steven Bregman


nafregnum
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https://www.thefelderreport.com/2017/06/06/podcast-steven-bregman-on-the-greatest-bubble-ever-passive-etf-investing/

 

I listened to this one and liked these ideas:

 

1. A bubble is created any time lots of people are buying something without concern for the underlying value.  Seems like what's happening when droves of people put their retirement savings plan on S&P 500 ETF autopilot. 

 

2. Interesting metaphor: The tech bubble of 1999 was like being in a canoe on the ocean and a single big wave hits.  The wave (the high part) was just the tech sector, a lot of the "old economy" stocks weren't overvalued.  The current ETF bubble is like being on a canoe and the whole surface of the ocean raises up a few feet.  It's harder to notice, but the damage of a whole ocean of water that is 2 feet higher than normal could be immense.

 

3. Taking out a couple of the FANG stocks, the S&P returns have been negative recently.  A lot of the huge consumer goods companies aren't really "growing" faster than population growth now... they've reached their market saturations for the most part, but they're being priced with P/Es in the 20s.

 

Interested in what you folks make of this.  I'm 50% cash currently (have been for a couple months now)

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I've capitulated.  I always look for the what is going to get the market to reprice the stock.  I've had attractive small caps for a while that are doing what they are supposed to but yet nothing unlocks and causes the rerate.  Yes, the stock moves for some screens and small and microcaps are out of favor. 

 

I'm 75% passive in ETFs (various) including some international ones that have not rode the wave.  Patrick O'Shaugnessey's podcast has had some decent conversation on this and where does passive end.  He has stated that 2 years ago passive was 15% and now he estimates its 40%.  Where does it end?  Can I think we have another 2 years of this. 

 

I've never watched flows very much but this is the one I do.  What happens when the total flows go negative as boomers get fully out and really start spending their retirement funds.  i don't know when exactly it happens but in theory everybody will have to sell (in various amounts) and that will create opportunity.

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I understand the market is overvalued in general, and cannot force myself to buy overvalued indexes. I was fully invested in S&P 500 from 2010 to mid 2015, and then moved to a very concentrated portfolio while learning value investing starting the fall of 2015. A discussion for those getting antsy should be where to patiently park your cash while the markets are overvalued!

`

Howard Marks "In my opinion, the key to dealing with the future lies in knowing where you are, even if you can't know precisely where you're going. Knowing where you are in a cycle and

what that implies for the future is very different from predicting the timing, extent and shape of the next cyclical move. And so we'd better understand all we can about cycles and their behavior."

https://www.oaktreecapital.com/docs/default-source/memos/2001-11-20-you-cant-predict-you-can-prepare.pdf?sfvrsn=2

`

"Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do." Buffett

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