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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

#191

Post by sytelus »

udev wrote: post #179
sytelus wrote: post #160

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…

New money into ETFs does not necessarily mean new money into the market. A big part of that is money just switching from actively managed mutual funds to passive index funds, e.g. recently pension funds in some states.

Active strategy may be investing in small/mid caps, currency, commodities, bonds, emerging markets and so on. Lot of that money would be pulled in to biggest popular indexes now such as S&P 500.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#192

Post by southphillyman »

clubm8 wrote: post #175

There's been something I've been thinking about: with so many people purchasing index funds, what happens when there is a major downturn in the market? What happens when millions of people sell off their shares in say, VASGX (basically an 80/20 stock/bond index fund)? Would that effectively tank the entire market rather than sectors doing poorly.

One of the "Pros" of passive investment is that you are in it for the long haul and not reactive to immediate swings in the market. In your scenario I believe the investor is supposed to treat a downswing like you would a 401k account. Cry inside at the losses and wait for recovery since your target date is likely 20-30 yrs down the road.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#193

Post by garethsprice »

arcbyte wrote: post #146
posguy wrote: post #104

Earlier quoted context omitted.

Its the plight of the newsreader, whereby you add nothing when writing about a subject, do no research on it, and avoid thinking critically about the news you've been told to publish or read to the viewers on TV. Newsreaders are not journalists, and being unable to form an opinion of their own, they are often willing to regurgitate anything their sources tell them without fail.

I don't know what world you're living in. The news is too full of opinion these days. If only I could find a source that JUST reported the facts I would give them all my money.

There's no such thing as neutral factual reporting - facts can be distorted or omitted to meet a bias at any level.

In my opinion the Reuters/AP feeds and The Economist do a good job of providing enough info you can make up your own mind based on your own preconceived biases, though.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#194

Post by TheCoelacanth »

zip1234 wrote: post #150
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…

I think you have identified that this is a self-correcting problem but are selling yourself short by thinking that the economy will be destabilized. If everyone goes towards passive investments, there will be huge opportunities in active investment because the passive investing is not correctly identifying value. These opportunities are likely to cause an outflow from passive into active if that is where the money is…

And the market is so huge, that even a slight amount of mis-pricing is a huge opportunity for active investors. A systematic mis-pricing of 0.1% is worth $18 billion dollars. That means the incentive to try to exploit even a minuscule amount of mis-pricing is huge.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#195

Post by aminorex »

aminorex wrote: post #131
posguy wrote: post #104

Earlier quoted context omitted.

Its the plight of the newsreader, whereby you add nothing when writing about a subject, do no research on it, and avoid thinking critically about the news you've been told to publish or read to the viewers on TV. Newsreaders are not journalists, and being unable to form an opinion of their own, they are often willing to regurgitate anything their sources tell them without fail.

I'll go one step further: "Journalists" are not journalists, and being unable to form an opinion of their own, they are often willing to regurgitate anything their sources tell them without fail.

I seem to have struck a nerve. You know it is true. The white house press corps, the science coverage, etc. Most reporters are undeserving of the association with journalism on the level of an, e.g. greenwald. They act as propaganda channels for "authorities".

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#196

Post by southphillyman »

I was a contractor at Vanguard around 2007-2008. IIRC, pay wasn't that good but rank and file FTE recieved 30k+ bonuses (allegedly). With this recent growth I wonder if compensation there has grown at a similar rate. I rarely hear people mention it as a good place to work or as having highly competitive compensation.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#197

Post by malchow »

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…

Say more. Why do I believe in the Capital Asset Pricing Model and Efficient Markets (both proven wrong) if I invest in Vanguard's cheap S&P 500 ETF?

I invest in their S&P 500 ETF because it's the cheapest way to get diversified exposure to the 500 largest American companies, and I believe that the 500 largest American companies will be more valuable in the future as a combination of valuation, scale, and cash flows to owners, than they are right now.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#199

Post by uiri »

mikekchar wrote: post #82
warcher wrote: post #42

I'm fascinated at how Vanguard's essential idea plays out over the long term. The basic value proposition seems to be that Wall Street is extracting more value in fees than they're making in smart stock picks. Which thus far has been pretty accurate, but is the contribution of stock pickers actually zero? Is it negative ? Where do we reach a fixpoint, and how? Do the stock pickers, clever scamps that they are, figure…

This may sound snarky, but it's not meant to be. When I've worked in large corporations I was astounded by the amount of... shall we say "irregular" stock activity. For a while I've been struck with the thought that you could probably make a pretty good living simply buying long stock the day before executive stock options are issued and then selling them again when executives are selling theirs (either through plann…

Was this before or after the large Enron scandal? One would hope that things have been tightened up since then and tightened even further on the aftermath of the late 00s financial meltdown but maybe they haven't been.

Re: Vanguard Is Growing Faster Than Everybody Else Combined

#200

Post by mfb2 »

southphillyman wrote: post #196

I was a contractor at Vanguard around 2007-2008. IIRC, pay wasn't that good but rank and file FTE recieved 30k+ bonuses (allegedly). With this recent growth I wonder if compensation there has grown at a similar rate. I rarely hear people mention it as a good place to work or as having highly competitive compensation.

The compensation structure has been significantly revamped since then. Partnership isn't what it used to be, so people don't get the big payments like they used to.
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