Comment on The Stock Market is Just Financial Fantasy Sports
MarriedCavelady50@lemmy.ml 1 month agoDon’t index funds work better than individual stocks?
Index funds are much better than individual stocks. But Index fund price to earnings ratios still reflect their individual component stocks.
When the P/E ratio is 40, a rough way to read that is “it will take 40 years of stability for this purchase to pay off”.
Many people don’t have 40 working years left to wait for a stock purchase today to pay off.
And the supply of “years of stability” isn’t looking amazing, right now, either.
More or less this, yes.
Index funds are generally less risky than trying to pick individual stocks, balance your own portfolio, or god help you, be an active day trader.
But, as pinball wizard says… if the blend of stocks the index etf is based on… if all the components are also varying degrees of delusional…
Then everything could break, rather rapidly, if enough small delusions, or one big shared delusion… are revealed as such.
I’m not actually a financial advisor, but I am giving some advice:
Go make a chart of the DJIA, divided by the USD price of Gold.
… Gold is pretty signifcantly outperforming the stock market, in this 2nd Trump term.
As the Chinese say, we are currently living in ‘interesting’ times.
Index funds work better than 80% of stock analysts.
tempest@lemmy.ca 1 month ago
They do, however a lot of people have known that for a while.
The large index funds have a lot of influence when it comes to voting.
As more and more people just invest in ETFs I do wonder if we are headed for some delightful market crash as a result.
I’m not even close to an expert though… Which is why I use index funds in the first place. Just wondering how I’m going to get screwed before it eventually happens.