I would very much like to invest in index funds, but Vanguard need a social security number, which I don't have. Does anyone know of an alternative that doesn't require an SSN, or something comparable to Vanguard in the EU?
Vanguard Is Growing Faster Than Everybody Else Combined
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Re: Vanguard Is Growing Faster Than Everybody Else Combined
#92With index funds so big, who determines prices? An index fund tied to the S&P 500 just buys stocks in the proportion that they're in the S&P 500. The price of the stock plays no role in that decision. At some point, this has to create problems, but so far it hasn't. It does mean the active traders, who are basically moving the same money around all day, have an outsized influence on prices. Index funds are so success…
http://www.zerohedge.com/news/2017-04-09/hedge-fund-cio-expe...
http://www.zerohedge.com/news/2017-04-09/horseman-global-unv...
We'll see how the next large correction plays out. That the "problem" may be "self-correcting" is not very reassuring (the dot-com bubble and the subprime fantasy also ended with some nice self-correction).
Re: Vanguard Is Growing Faster Than Everybody Else Combined
#93Earlier quoted context omitted.
It's relatively new. They have no site, trading and research tools, investing plans etc. Most of the big brokers offer commission free trades on ETF's and mutual funds.
Can you name a few that support commission-free trades on ETFs/Mutual Funds for Roth IRA accounts? Can't find one using Google. Thanks.
Vanguard for Vanguard ETF/Mutual Fund products in a Roth IRA brokerage account.
Re: Vanguard Is Growing Faster Than Everybody Else Combined
#94I would very much like to invest in index funds, but Vanguard need a social security number, which I don't have. Does anyone know of an alternative that doesn't require an SSN, or something comparable to Vanguard in the EU?
Do you know about ETF? Most of the Vanguard mutual funds have an ETF version.
Re: Vanguard Is Growing Faster Than Everybody Else Combined
#95Of course. There wasn't a significant recession since 2009. It is psychologically very easy to buy into a rising market. When the next (inevitable) correction happens, the tide will change and stock pickers will return to the spotlight. (It might be not rational, of course. But markets are never rational. They are efficient — efficient in projection of our hopes and fears).
I don't think market conditions have much to do with it. Whether to invest in the market, or in a certain asset class, is a separate decision from whether to pick stocks or buy a passively managed fund. Passively managed money has been increasing because there are more low-cost funds available, and lots of education about stock picking versus passively managed funds (e.g. Warren Buffet, A Random Walk).
> Whether to invest in the market, or in a certain asset class, is a separate decision from whether to pick stocks or buy a passively managed fund.
Picking stocks vs Picking managers vs Passively investing, but sure. You're right in principle but i'd question whether it's true in practice?
Re: Vanguard Is Growing Faster Than Everybody Else Combined
#96Earlier quoted context omitted.
Index funds buy or sell blindly, at whatever the prevailing best price is. Naturally, if there were only index funds in the market, the price would vary randomly. That being said, consider what would happen if stock prices did start to vary randomly - if you had actual research suggesting the price was too high or too low, you could trade accordingly. This would net you a profit, and also help push the price in the o…
stock prices Do vary randomly.
I'm assuming that is a reference to the random walk theory. That theory suggests that "the past movement or trend of a stock price or market cannot be used to predict its future movement". It's random in the sense of unpredictable, not in the sense of actauly being determined by chance.
The implication of the random walk theory is that current information is already uilt into the price of the stock. That is only true insofar as there are active traders acting on that information. The parent is merely explaining why those traders will exist, and why you only need a small part of the market to actively trade.
Re: Vanguard Is Growing Faster Than Everybody Else Combined
#97Earlier quoted context omitted.
Why do you say Vanguard will collapse?
Stretch the timescale long enough and everything will collapse. In the case of financial institutions, this timescale is often within a human lifespan. So you might be wrong today, might be wrong tomorrow, but if you bet on failure, you will eventually be right.
In an apocalypse type scenario all bets are off anyway so you might as well ignore it.
Re: Vanguard Is Growing Faster Than Everybody Else Combined
#98I would very much like to invest in index funds, but Vanguard need a social security number, which I don't have. Does anyone know of an alternative that doesn't require an SSN, or something comparable to Vanguard in the EU?
You would have to go through a EU bank who would act as a middleman. There are many of them that have zero fees so it would be practically like if you were investing directly with Vanguard.
Re: Vanguard Is Growing Faster Than Everybody Else Combined
#99Earlier quoted context omitted.
> And the bigger indices grow, the larger the opportunities for active traders to profit. I'm having trouble understanding why this is the case. Care to clarify?
Index funds buy or sell blindly, at whatever the prevailing best price is. Naturally, if there were only index funds in the market, the price would vary randomly. That being said, consider what would happen if stock prices did start to vary randomly - if you had actual research suggesting the price was too high or too low, you could trade accordingly. This would net you a profit, and also help push the price in the o…
Resuming, as I understand it:
Good stock pickers > Index Funds (blind money) > Bad stock pickers
By investing on index funds you are betting in the average of the average (a fund is already an average of undervaluated and overvaluated stocks).
However, by investing on managed funds your probability of having profits over index funds is low: even if stock pickers that beat the market (by definition) amount to 50%, extra fees make most of them still less profitable to investors than passive funds.
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Re: Vanguard Is Growing Faster Than Everybody Else Combined
#100The fact that Vanguard is growing faster than everybody else combined is interesting indeed. The article itself, however, reads like one big ad for Vanguard. The fact that the NYT is somewhat affiliated with them ("They number well over 20 million and include New York Times employees: Vanguard runs the company’s 401(k) retirement plans.") doesn't help either. What I miss is a critical examination of the situation. They're just drinking the Kool-Aid.
Although negativity on HN is often too high I am glad it is here when it comes to articles like this one!