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Investors Ride The Wave As US Stock Inflows Near Half-Trillion
US stocks: Folks are still buying them.
ETFs and mutual funds dedicated to US equities took in $13
I’m sure you’ve got an answer to that question. Want to share?
But what happens when the majority of equity investment comes to be managed passively?”
Answer: The stock market will be prone to violent and extreme swings.
This answer is based on my experience in owning shares in a publicly traded company, in which the CEO/founder owns 94% of the shares. In the last 10 years, he has never sold any, but the 6% that is publicly traded is subjected to extreme manipulation – in both directions. The resulting investment situation, for the few outside investors, is nothing short of “volatile”- as in similar to living with someone who is on the spectrum of “manic depressive”. This requires an investor to be a believer in the long term potential success story (in order to make money) of any company, or pool of companies, in which one passively invests.