Are Index Funds in a Bubble? | Briefing v12 — MoneyRedPill

  1. Massive cash influx into index funds are distorting stock (45% of equity market) and bond (25%) prices, similarly to collateralized debt obligations (CDOs) did with subprime mortgages leading up to the housing market collapse in 2008. Burry claims “passive” funds, essentially baskets of the same company stocks grouped within an index, and packaged as a single product; are being artificially overbought on a huge scale regardless of the underlying fundamentals, and the stock prices are perpetually inflated, completely nullifying any semblance of market price discovery.

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