Are Index Funds A Bubble? [2018]



We are currently at a stage when something like 30% of investors are index investors…

Surely there could become a time when everyone became index investors?

If everyone simply owned the S&P 500 it would be an absolute disaster!!!

Are we in bubble territory now?


To be honest, it wouldn’t even matter to me. I would still keep plugging away. I might not do better than the market, but I won’t do worse than the market…


I think its unlikely to happen - greed would intervene!

Pension funds, fund managers, high het worth individuals - these guys would all launch into the market if the value became too exposed. Not going to happen…


I remember Seth Klarman, the hedge fund extraordinaire, saying that indexing in just a fad.

I agree. When the cracks begin to show, or we have a serious crash, all will be revealed…

But if that did happen and you just stayed the course, I think it would be fine!

I think at some point, people will get incredibly scared, or incredibly greedy and will bail out. The people who stay the course, will probably suffer int he short term. But take the reap the benefits of indexing in the long-run!