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Index funds strike me as a very bad idea. They reward unprofitable ventures just for being in some index. Buying into an index fund, therefore, is buying into a class of systemically overpriced assets. Yes, backtested, index fund investment does well---but that's because you're backtesting into an era before everyone was bleating "buy index ETFs!".

Between weird investment strategies, the length of the current boom, and the very low interest rates at the peak of the boom, this coming bust is going to be a massacre. I'm honestly not even sure whether the system as a whole will survive it.




Index funds basically delegate "price discovery" to the activity of other investors, and just assume that the market price is the right one.

This works as long as there are enough non-index investors trying to outsmart the market by actively trading.


And there will always be active traders setting prices, because it is profitable to do so.


> I'm honestly not even sure whether the system as a whole will survive it.

The question then remains the same while changing. Do I invest in the market, or in canned goods?


Both.


I suspect incredible funds are overinvested (as occurred to many popular labelled investment strategies from the past).

But although you might get better returns picking the next strategy, you probably would do fine with index funds.

And timing the market has always been a loser strategy (except for a few lucky or skilled outliers).




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