Why not 3a? I prefer 3a (long time horizon) buy-in on ATH over 3b/free portfolio (mid time horizon) buy-in on ATH.
Or is the argument to not buy assets in general at their ATH?
Not my field of studies, but where was it published?
Whatâs the tl:dr?
Well, I think Equities are seen as safest asset these days by investors because they think market always go up eventually.
Index funds add more pressure because these flows buy without thinking. Just buy new stocks because more money came in.
S&P 500 earnings yield is around 3.5% and dividend yield is around 1.3%. I hope earnings increase substantially or else the market would become even more distorted.
The asset prices have substantially increased versus their earnings increase and at some point this would result in a big issue. But I donât know what to do in this situation other than asset class diversification.
Having said that I also think Swiss RE is having similar issue too. Rental yields are becoming very low in major centers.
Wonder if weâll be known as the âETF bubbleâ, doesnât have quite the ring the âdot com bubbleâ or âgreat financial crisisâ do. âPassive investing cliffâ, âBoomer withdrawal crashâ? Maybe the last one has a chance?
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Nah, we are too old for that. If that will happen it is because the holy grail youngsters panickingâŠ
I simply donât buy overvalued stocks, no sense in carrying that kind of risk. But I hold them once they get overvalued and still have momentum, as you never know how far the crowd pushes prices up. But as a holy grail child you do buy those overvalued stocks and in very big quantities!
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Surely this is some kind of cognitive bias since buying, and holding when overvalued is really the same thing economically.
If they are overvalued and still have momentum you could make the same argument for holding when overvalued to buying and riding that momentum.
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Not my gen (born late 70s early 80s), but my parentsâ generation: the real boomers born late 40s early 50s, not what children born in 2000 think a person who can spell and wait 5 minutes a booker makes.
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Seems like this was in https://www.nber.org/
It is the same always, overvalued or not. I just have a momentum filter before selling. I could use the same filter for buying overvalued stocks, but come on, that is what all the kids do anyhow.
I know, it is a bias. But it is a controlled one, works always the same way. Donât buy when overvalued, wait with sell until momentum is gone. Doesnât make sense, but makes money. 
In logic a âholdâ state makes no sense. But in practice it makes sense. I suppose it works because almost all investors have that bias.
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As I understand it, institutional investors account for the majority of the market and tend to implement passive strategies as well. So at least we all go down with the boat if shit hits the fan.
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Passive flow are dominating and itâs becoming worst. Yes, the biggest responsibles are pension funds. Politicians will do whatever it takes to guarantee these pension entitlements for as long as they can. Plus, Itâs a self reinforcing mechanism. In my opinion it still has room to go.
But ultimately, it creates massive capital miss allocation. Same winners keep being funded and very little is being bet on the winners of tomorrow or anything in the mid market (speaking of public markets only). So the stock market is about MAG7 trading at premium and some random popcorn meme stocks. Nobody cares about the rest. Quality companies are increasingly being funded in private markets (At forgiving valuation or private credit without dilution).
Isnât that how the market works? Nvidia wasnât that hot for most investors until a few years ago. Microsoft, Apple or Facebook declared beyond their peak once in a while. Tesla used to be one of the most shorted stocks, and for a reason. Amazon sold books, howâs that a possible winner?
I mean most of those do make decent money, and the prices implies theyâre expected to make even more, but even in a passive investments, couldnât any other company just rise as fast?
Nobody cares about entry price. But there are thenthousends of issues that ar not bought for some reason. Sorry, but that is the point.
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Bit of an overstatement.
Look at least our stockpickers trend, and your point is negated.
And Iâm sure there are millions more that donât just âbuy the haystackâ.
As some have linked to research earlier already - no room to worry (at least yet).
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I think we index investors donât have much choice. Itâs not like we can exit the market. So only thing we can hope for is that some regulation comes which forces index funds to hold cash to allow for withdrawals without causing massive swings in underlying stocks
Whenever the tipping point will come, a day before it will always feel like âthere is a lot of room to goâ
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You know how everything is: regulations come after disasters, new disasters arenât caught by old regulations 
Definitely
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Itâs not just passive, itâs people who are long in equity. IMO one of the issue is just the amount of capital (retail, pension funds, sovereign wealth fund, etc.) flowing into equity, whether thatâs allocated passively or actively wonât really change the situation, while thereâs massive inflows things will keep going up.
(I guess long/short active allocation would be less of an issue)
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Youâll like reading this: Why Michael Green Is Known as the Cassandra of Passive Investing | Institutional Investor
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For the time being, however, Green acknowledges that the passive juggernaut is likely to keep the market afloat. âUntil this stops, you canât beat the indices,â he says. âAnd until things change, markets will continue to go up.â
What an epic copout, so many words to say ânobody knows anythingâ!
For a few years the bogeyman was US debt, then tech bubble, then Ukraine and bonds, then US valuations and AI bubble, then Trump, now there are noises like this one about passive investing. Not saying any ONE of the above couldnât be the killer, or all at the same time, but (Tyrion Lannister stuck in my head the phrase âyou can ignore anything anyone says until they say the word âbutââ) it makes this one (ie me) circle back to ânobody knows anything, TINA, just keep buyingâ. Guess âpassive bubbleâ is as good as anything if/when this generation of investors has itâs epic crash.
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