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Will there be a market crash due to ETFs?
For a while now,
Michael Burry has been warning of a bubble crisis amid huge inflows in to index funds.
This thread is to lay down his argument and spark a debate.
Michael Burry has been warning of a bubble crisis amid huge inflows in to index funds.
This thread is to lay down his argument and spark a debate.
His argument seems to have been swept under the carpet since the market crash caused by COVID.
Burry warned of an upcoming Crash caused by ETFs. But we've now seen a staggering recovery with indexes back to creating new highs.
Which begs the question,
Is there still a bubble?
Burry warned of an upcoming Crash caused by ETFs. But we've now seen a staggering recovery with indexes back to creating new highs.
Which begs the question,
Is there still a bubble?
Why does Burry warn against ETF's and indexes?
Because of the new passive investor that has emerged.
Burry believes that the attitude of no research and simply putting cash in to an index with little thought is mimicking the lack of security analysis, like 2008.
Because of the new passive investor that has emerged.
Burry believes that the attitude of no research and simply putting cash in to an index with little thought is mimicking the lack of security analysis, like 2008.
Burry states that this mimicking does not allow for true price discovery.
He also said that this bubble is very much like the bubble in synthetic asset-backed CDOs which caused the 2008/2009 financial crisis.
He also said that this bubble is very much like the bubble in synthetic asset-backed CDOs which caused the 2008/2009 financial crisis.
Why is this a worry?
In a major sell off, ETF selling could trigger a problem for stocks with lower liquidity.
This could intensify a market crash.
In a major sell off, ETF selling could trigger a problem for stocks with lower liquidity.
This could intensify a market crash.
We have just witnessed a market crash.
However, this wasn't down to ETFs.
Therefore they have seen a wild recovery and people are still continuing to pile their cash in to these Indexes.
So, is the bubble getting bigger?
However, this wasn't down to ETFs.
Therefore they have seen a wild recovery and people are still continuing to pile their cash in to these Indexes.
So, is the bubble getting bigger?
Burry made these comments in September 2019.
But, investor confidence in ETFs seems to have remained strong if not even stronger after the COVID market crash.
Do investors need to worry about a poten ETF bubble?
But, investor confidence in ETFs seems to have remained strong if not even stronger after the COVID market crash.
Do investors need to worry about a poten ETF bubble?
