The whole S&P will sell off in unison, possibly severely, when the over-valuation (i.e. buffet indicator) is corrected due to the prevalence of passive investing ETF's. There will be no hiding place, and fundamentals won't mean anything until after the rug pull is past. This is a time for caution, not temptation.
Thanks, I agree there is a risk of "sell everything" where correlations go to 1 ---but I think we'll find that the large caps will see the greatest selling pressure in such an event due to the skew in allocations to big tech (partly as a result of cap-weighted passive funds where the biggest stocks get the biggest flow, and preference by investors for larger cap/tech skewed funds like QQQ + single-stock leveraged ETFs)
I agree on the need for intelligent risk management and diversification, especially I think we might get a reminder of how useful bonds can be.
The whole S&P will sell off in unison, possibly severely, when the over-valuation (i.e. buffet indicator) is corrected due to the prevalence of passive investing ETF's. There will be no hiding place, and fundamentals won't mean anything until after the rug pull is past. This is a time for caution, not temptation.
Thanks, I agree there is a risk of "sell everything" where correlations go to 1 ---but I think we'll find that the large caps will see the greatest selling pressure in such an event due to the skew in allocations to big tech (partly as a result of cap-weighted passive funds where the biggest stocks get the biggest flow, and preference by investors for larger cap/tech skewed funds like QQQ + single-stock leveraged ETFs)
I agree on the need for intelligent risk management and diversification, especially I think we might get a reminder of how useful bonds can be.