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Vanguard Is Growing Faster Than Everybody Else Combined

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Re: Vanguard Is Growing Faster Than Everybody Else Combined

#151

Post by zeroer »

zeroer wrote: post #143
acchow wrote: post #129

Earlier quoted context omitted.

False - this is not how tax loss harvesting works. Even if you are in the black every year, you can still benefit from it.

That is exactly how tax loss harvesting works. Here's a quote from Betterment: "What is Tax Loss Harvesting? Tax loss harvesting is the practice of selling a security that has experienced a loss." https://www.betterment.com/tax-loss-harvesting/

I think it's telling that in their promotional materials designed to show their merits, Betterment shows a maximum time horizon of 10 years. I think they know that their strategy is much weaker on longer time horizons, yet the fees remain constant. 10 years may seem like a very long time to some people, but when I invest I'm thinking about time-frames of 30 to 60 years. Meanwhile you can tax loss harvest yourself with a little education.

https://www.betterment.com/resources/investment-strategy/bet...

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#152

Post by spcelzrd »

galfarragem wrote: post #140
VMG wrote: post #102

Earlier quoted context omitted.

> Why not invest on a good stock picker? You can only tell them after the fact

Sure, but I still prefer to bet on Buffett than on a managed fund that is consistently beated by the market. [edited]

Buffett would take the other side of that bet.

http://longbets.org/362/

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#153

Post by StavrosK »

lordnacho wrote: post #145
StavrosK wrote: post #133

Earlier quoted context omitted.

I'm afraid I'm not very up to speed, all I know is that I want index funds, basically. I have heard of ETFs, but not in any great detail.

Basically any brokerage account can buy the ETF like it's a stock (which is what it is). So just log into your account, find the ticker, and buy it.

Oh, that's great, thank you. I will open a brokerage account here and buy the ETF then, thanks again.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#154

Post by lr4444lr »

headmelted wrote: post #125

As a Vanguard customer, I can understand why people are so enthusiastic about their products, and have known for a while that passive investment, and Vanguard in particular, was growing while active management was on the decline. At no point did I think the difference in inflows was anywhere close to 8.5x. And it does worry me. I'm familiar with the contention that even having some active players in the market will a…

If you're a Vanguard customer (buying the flagship fund classes, I presume), you're expressing faith in CAPM[0] and EMH[1] on a significant level. Some active investors will probably in the long term scoop up some extra gains, but the question still remains: which of them, over what time horizon, and is that a risk you want to take? Vanguard gives you lots of no-commission funds with 1 day liquidity even in the mutual funds - plenty of room for you to try and time the market if you think you can have a go at active trading around some predictable flows if too many people are passively investing. Nothing stops you.

[0]http://www.investopedia.com/terms/c/capm.asp [1]http://www.investopedia.com/terms/e/efficientmarkethypothesi...

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#155

Post by lr4444lr »

cJ0th wrote: post #90
loeg wrote: post #57

Earlier quoted context omitted.

> With index funds so big, who determines prices? ... At some point, this has to create problems, but so far it hasn't. Any active trader remaining in the market. Fortunately, active traders still make up a large part of the market. And the bigger indices grow, the larger the opportunities for active traders to profit. It's not a real problem — it's self-correcting.

> And the bigger indices grow, the larger the opportunities for active traders to profit. It's not a real problem — it's self-correcting. I appreciate that finally someone puts forward a rational argument as to why index fonds will keep working. Books and online resources tend to not take a critical look at the system at all or they offer an answer along the lines of "Trust me!" Having said that, only hindsight is 20…

I can only speculate as to what is going to happen but my hunch is that in the long term the gap between returns from index fonds and savings books is going to become a great deal smaller as more people are willing to shoulder risk for companies and thus risk premiums go down

Doesn't that suggest people on average have had a misplaced fear of stock (indices) in the past, and that capital is now more efficiently allocated? Sounds like it would make the world better off.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#156

Post by dan1234 »

StavrosK wrote: post #91

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?

I don’t know where in the EU you are but, in the UK I buy Vanguard funds (mix of LS100[0] & LS80[1]) through an S&S ISA[2] and a SIPP[3].

Pretty straight forward.

The ongoing for the funds are 0.22%, the ISA platform 0.25% and the SIPP 0.3%

[0]http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx...

[1]http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx...

[2]https://www.cavendishonline.co.uk/investments/buy/

[3]https://www.bestinvest.co.uk/pensions/sipps

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#157

Post by jo909 »

kevinburke wrote: post #35
NTDF9 wrote: post #9

Here's a question for someone more savvy than me. What happens if the vast majority of stock investments end up in vanguard funds? In an economic crises, will everyone try to sell the same set of funds and will crash the funds themselves?

> will everyone try to sell the same set of funds and will crash the funds themselves? The ETF is backed by stocks in other companies, so if one person tries to sell someone else should be willing to buy, so long as the sale price * the number of shares is below the collective value of all of the shares held by the ETF. Collective ownership of companies is a more interesting question. If everyone owns fractions of ev…

> If everyone owns fractions of every company, what are the incentives for good governance at any one company? If it goes bankrupt, it's only a tiny fraction of everyone's portfolio.

And all the other companies in the same market segment will then gain a share of the customers and income of the now bankrupt company, so there is little to no effect overall.

Of course this is exactly why some people choose to invest in markets instead of individual companies, because that has less risk.

Of course this is also why other people choose to invest in companies they assessed are way ahead of their market, because that is more profitable.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#158

Post by lr4444lr »

debatem1 wrote: post #3

This feels like an article that will be shown for irony points in a documentary about Vanguard's collapse a few years from now.

Collapse how? And what would the fallout be, that investors lose some money through lawyer fees and auction write-downs? The value added is in the services of trading the underlying equities, not the companies issuing the actual stock, which are as sound as the market indices they replicate.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#159

Post by dsacco »

lr4444lr wrote: post #154
headmelted wrote: post #125

As a Vanguard customer, I can understand why people are so enthusiastic about their products, and have known for a while that passive investment, and Vanguard in particular, was growing while active management was on the decline. At no point did I think the difference in inflows was anywhere close to 8.5x. And it does worry me. I'm familiar with the contention that even having some active players in the market will a…

If you're a Vanguard customer (buying the flagship fund classes, I presume), you're expressing faith in CAPM[0] and EMH[1] on a significant level. Some active investors will probably in the long term scoop up some extra gains, but the question still remains: which of them, over what time horizon, and is that a risk you want to take? Vanguard gives you lots of no-commission funds with 1 day liquidity even in the mutua…

I think the parent commenter is more concerned about the economy's overall stability, and believes passive investors could be exploited due to mis-pricing index fund underlyings. I didn't interpret it as a worry about missing out on active investment, but I could be wrong.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#160

Post by sytelus »

Total market cap of S&P 500 have increased from $13T to $21T from 2012 to 2017 without having corresponding underlying financial growth in companies. This $8T difference feels tantalizingly close to new investment money flowed in via ETFs. I am wondering if current rise in S&P 500 can almost entirely attributed to new money flowing in to ETFs. If this thesis is correct then we can continue to expect more bull market for next few years as we are very likely not even half way through this cycle of money flowing from active strategies to passive strategies. In other words rise of S&P 500 indexes would become self full filling prophecy for at least next few years.
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