[stephanheijl]

A large contributor to this would be the increase in investors pumping money in "safe" and easy ETFs. Instead of taking the time to investigate the market and looking into novel ventures, people want to ride the market into wealth.

If there ever was any social responsibility in investing, it would have been providing fluidity into new ventures and making markets efficient by making educated investments. I find this trend worrisome and I think it might be sending incorrect market signals.

[ng12]

It's not about passive investing, it's about TINA: https://www.investopedia.com/terms/t/tina-there-no-alternati...

[Tiktaalik]

This is me 100%. Especially with covid making big swaths of the economy (ie travel) unviable in the near to mid term. What does still make sense is tech, and drilling into that deeper, AAPL.

[ascar]

I don't really understand how this train of thought seems viable. Even the most profitable company in the world might be overvalued and then this investment isn't safe but risky, especially if the profit is primarily from rising prices and not dividends. So, how can one think there is no alternative and it's "safe"?

[Tiktaalik]

It's as the parent says: TINA. It's not that Apple isn't risky, but that everything else feels more risky.

Casino stocks, more risky. Cruiselines, more risky.

The money has to flow somewhere.

I mean it's not just tech that's not risky. There's some other equities out there too which seem to be concensus safe havens by investors. Eg. Lululemon, Home Depot.

This is why we're seeing big interest in some sectors of real estate too. money is cheap and big chunks of the economy seem risky. Why not invest in something else. Also risky, but TINA!

[fancyfredbot]

This isn't actually true. Alternatives include bonds, commodities, credit, real estate, etc. At least some of these are less overvalued (look at Hertz bonds vs stock for example). What does seem to be true is that a lot of people aren't considering anything other than equities.

[reducesuffering]

TINA means no reasonable portfolio will ever contain 0% equities. All other asset classes can be reasonably substituted.

[epistasis]

Thank you, I hadn't heard this term before and it's great to have a name for it!

[epistasis]

Is ETF investing driving the current inflated prices? I wouldn't doubt it, but hadn't seen data.

It's also important to note that different sectors are getting hit in different ways. Renewables up, oil majors down. Tech way up. So if total-market ETFs are pumping in money, they are just inflating overall valuations, and investors are the ones deciding which sectors and companies are winning or losing. Or if it's market segment ETFs, that would also be an interesting story.

[linuxftw]

The largest driver of asset inflation in the large caps is 401k's and other retirement/pension plans managed by large entities. I have no choice but to invest my money in my 401k into the stock market or equally risky and lower return corporate bond market.

Individuals investing in ETFs doesn't move the needle. Fund managers seem to be part of some cartel, pumping various asset groups at various times. We're just along for the ride.

[phkahler]

>> The largest driver of asset inflation in the large caps is 401k's and other retirement/pension plans managed by large entities.

Yep. If covid had put 40 million US white collar people on unemployment instead of hourly folks, the market would have crashed hard as the monthly influx of money dropped and some people started pulling money out early to get by.

[Nasrudith]

I know I am an outlier in terms of a high savings ratio due to a lack of things to want that would be worth it in my situation but I still find it funny how it 401ks are the big ones when the contributions are so limited.

[Analemma_]

> If there ever was any social responsibility in investing, it would have been providing fluidity into new ventures and making markets efficient by making educated investments. I

If investing in ETFs/index funds is morally blameworthy, which is already questionable, the blame surely lies with active fund managers and their outrageous costs driving people into the arms of low-cost instruments that, net of fees, have had better performance.

[rogerkirkness]

The more people buy it, the more value there is in active or truly risky investing. Let them have fake safety, I'll take real antifragility and abundant capital flowing to my business any day.

[drivingmenuts]

It seems like the responsible thing would be to create stability, not chaos by dumping money into unproven ventures that everyone could lose on.

If that’s not the case, please explain.