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Comment by theK | Hacker News Reader

Sometimes I wonder whether ETFs that track top valuation will lead to some weird stickyness and overvaluation in say, S&P500.

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I have the same thoughts. Eventually there will be a lot of money to be made breaking the s&p 500.

Can you explain the "breaking" trade? And why haven't we seen more written about it?

Not sure what they mean specifically but you've probably seen a lot written about it, in terms of BRICS, the petrodollar, ARM in China, subsidies on electric cars, and so on.

Personally I try to avoid investing in the US for political reasons, besides the wishful expectation that the empire could fall within my lifetime and hence be a not so good investment.

Think of when George Soros broke The Bank of England for an example of the type of trade.

There is a lot of demand for S&P 500 index , but that demand isn’t exactly tied to the fundamentals of the index, and the price isn’t tied to value of the underlying companies, it’s tied to demand of people looking to save money for retirement or a place to store a nest egg. This is an opportunity for price discovery to get things wrong and eventually the market should correct that.

https://www.investopedia.com/ask/answers/08/george-soros-ban...

I don’t get it. Soros was able to break the pound because the UK government was committed to maintaining an artificial price. That’s nothing like an ETF or mutual fund of the S&P 500, which probably has one of the most efficient (relative to the capital involved) market price discovery mechanisms in history.

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