But the story is not about all indices being wrong, the story is about index management being corrupted. Like bond ratings on mortgages in the run-up to 2008.
"Im too busy to spend 30 minutes to move my retirement somewhere I trust" just doesnt cut it.
The system doesn't work properly. Retirement is fundamentally broken in the US. The sooner people realize and wake up to that the sooner things might change.
Sadly, some poor slobs are too lazy to be as informed as you.
And it was, for a while. Then financial vultures realized there's huge pots of money tied up for 40+ years in funds that the person doesn't directly manage or have a say in. And if the investments are in indices then the index gets to vote on company matters across the economy on your behalf. What could go wrong?
People should honestly read Killing the Sacred Cows it’s an eye-opener for anyone invested in 401k.
Any funds lying around are supposed to be for temporary imbalances, but became significant due to a major demographic imbalance: the Baby Boom.
It's now at £79B. It's significantly overfunded.
Right so what’s the point then? Doesn’t that prove the point: zero gain/loss with a 10% withdrawal penalty to boot.
Doesn’t it say that it’s a retirement fund, intended to be saved until retirement age? The 10% penalty is little more than a wrist slap level deterrent, too. It’s usually like ~1 year of returns. Not a huge deal if you need to dip into it.
(There’s plenty to criticize about the whole 401k system of retirement accounts. But these criticisms seem misguided)
People putting retirement funds in a pile of companies that often have little impact on local communities they live in.
They’re changing laws to fast-track sketchy IPOs, putting hard earned money at risk why? So we can send people on a death-mission to Mars?
Point being, they are doing what they will with other people’s money and won’t suffer the consequences. Removing the checks and balances is exactly how financial disasters happen.
You believe that the owners of the leading AI companies stand to become owners of most wealth. Furthermore, that we are at an inflection point where the value of these companies rises so rapidly that delays in index investment will set in stone a permanent inequality, where early tech VC and other private funds own a huge portion of the economy. The few-$T downside risk of AI bubble popping this year feels to you like a minor concern compared to index funds being shut out of this wealth due to some arbitrary rules, which have been changed before and can be changed again. Delaying investment in these huge public companies feels like a more dangerous decision than buying in when they become public.
In short, there are two possible stories here:
1) Wall Street is AGI-pilled and thinks AI companies will be worth many trillions of dollars
2) Wall Street expects the AI bubble to pop and is trying to make the public into bag holders by selling a few hundreds of billions of dollars in the IPO
I think the second story actually doesn’t hold together, because Wall Street is making a bunch of correlated bets. The IPO cash is just one more source of capital, and much of it going to be used to make investments which are also correlated bets.
1) If the AI companies do end up running half the economy, we will have discussion for the rest of the human history about how the public got scammed by not being able buy in earlier at a lower price and how the late IPOs set in stone the oligarchy.
2) If the AI companies crash and burn, we will have discussion for several years about how everyone involved in running and financing them is a scoundrel who needs to go to jail for scamming us by selling us stock.
This has been proven time and time again. That’s the whole reason we diversify risk.
So, we will not have conversation 1, because that is not what index funds are meant to do.
No, they absolutely don't fear prison (but they should).
It's just the aggregate behaviour of a group of people optimizing for short term profit and self-enrichment over everything and without any need for long-term careful planning because for various reasons they are pursuing the short term at all costs.