Index Funds for the Long Haul? Why Some Pros Are Nervous

The Money with Katie Show

Money with Katie

Self-improvement, Education, Business, Investing, How To

4.8 • 1.3K Ratings

🗓️ 9 October 2024

⏱️ 38 minutes

🔗️ Recording | iTunes | RSS

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Summary

We unquestioningly repeat the knowledge that index funds are the easiest way to “passively” build wealth. But what happens when too many investors go passive? Is this the most “benevolent bubble” in history? (Fair warning: That description is hyperbolic.) In this week’s solo expedition, I attempt to make sense of these claims—and what it would mean if they’re true. (I am not a licensed financial professional, I’m just a podcaster with internet access, so please do your own due dil.) Find a transcript—as well as the research and sources used to produce this episode—at: https://moneywithkatie.com/index-funds Money with Katie’s mission is to be the intersection where the economic, cultural, and political meet the tactical, practical, personal finance education everyone needs. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Thoughtful driving tips from Eso, number three.
0:03.0	This is Kiran. He's doing 70 on the motorway,
0:07.0	on his way to a cheeky spar appointment,
0:10.0	though his diaries as he's visiting a client.
0:12.8	Naughty Kiran, lowering his speed to 60 could save him up to 9% in fuel on the journey.
0:19.8	Enjoy that hot stone massage, Kiriron, slowing down a little.
0:24.4	If you listen to financial podcasts like this one or hell, you even like attended your
0:31.4	company's benefits presentation about your 401k plan options,
0:35.2	chances are that you are now well aware of a supposed truth in financial markets.
0:42.1	The safest place to invest your money is in broad, diversified, low-cost
0:48.4	index funds, right? It's such boring anodyne advice against a backdrop of meme stocks and crypto as to barely
0:57.6	register as a novel idea.
1:00.0	I alluded at the end of our episode about Social Security that index funds might be a pyramid scheme of their own,
1:06.5	and this was, of course, meant as a light-hearted joke, but every joke possesses a tiny glint of reality. So naturally and regrettably, this
1:17.4	prompted a flurry of panicked listener emails from people who apparently listen
1:21.5	to this show to the very end, thanks, and I decided that this
1:25.5	concept, that the mass reliance on and faith in passive investing might be concealing a more complicated reality about markets,
1:37.0	then we are collectively ready to metabolize.
1:40.0	I think that's worth a closer look. Welcome back to the money with Kady Show.
1:50.0	As always, I'm Katie Gai Tossan,
1:53.4	and today we are breaking down the theories
1:55.8	and arguments that index fund investing
	...

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