![]() ![]() So long as such funds have inflows, they do not sell. Perversely, passive funds’ demand for a stock generally grows as the price increases because the weighting of the stock in the indices they track increases. Passive funds have little discretion whether, and at what price to buy – they must buy if they have inflows. However, the problem may come further down the line, when flows into passive funds, turns negative. Retail traders only tend to buy big tech names they know, so the weighting of the index is shifting more and more towards them. Wall Street may sell out profits and look for value, and that causes the price to drop, but retail buyers will be there to pick up the slack temporarily. The old economists will claim it is breaking their models with regards to p/e ratios, in the same way Roubini has declared cryptocurrencies ‘Shitcoins’, and an asset bubble waiting to burst. ![]() The generation of young professionals coming through will have known nothing else. We are living in an age of mobile phone app trading and investing. This sheep-like trading on sites like Reddit, will always create bubbles, or ‘trends’ as they could be referred to until the bubble bursts. People feel safe in a crowd, so if you have a stock account but don’t know what to do, just do what the guy next to you is doing. Here is an extract from an article we wrote last year saying that the collapse of big tech is/was inevitable.Īn extract from an article written by The Portfolio Platform in February 2021. The thing we didn’t know, was WHEN they would crash, and how high much they might go in the interim. We all KNEW that mega tech companies such as Apple, Microsoft, Amazon and Meta were too high. It only feels like you did, after the fact.Ī good example of this is the recent tech crash. If you really know what’s going to happen, AND when it’s going to happen, then money will rain from the sky. How often in the market do we think, ‘I knew that was going to happen’?Īs a trader, I can tell you it’s a daily occurrence in our world but Trading isn’t just about getting the direction right, but also the timing and that makes it a very difficult job. 'Hindsight will always be the best trader of us all.' ![]()
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