ETF, Bert, United States discussed on This Week in Startups

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I is and i i was swimming there's some related is the amount of etf's which i think you're part of the movement i guess there was some speculation there's too many people into etf's and that could cause a problem and i didn't understand this because i thought ats report of the solution but i guess people come in and out of etf's quickly and maybe that creates this flash crash how do we look at etf's and the fact that people are not picking stocks as actively as they once did well there's absolutely no academic research shows that have had any negative impact on the stock market okay it's a narrative that is promoted by people who believe in active management of for those and index funds in general index mutual funds index etf's have taken tremendous share out of actively managed funds and so many of the people who are proponents of actively manage funds like to spread fear uncertainty guile fudd yeah to try to get people to worry about these things and you know it's funny burt milk you'll wrote a book log post on our on our website that talks about what percentage of the market needs to be an index funds before it's a worry and today it's about thirty five percent of markets and bert sir hypothesize is that we have to get to ninety or ninety five percent before there isn't enough money to price the securities accurately got it because a long way away the are just saying hey what is the makeup of the index and it's not saying what's the value of each individual ask whereas an individual individuals trading do determine that correct and as long as there's five percent of capital available for that that should probably accurately price the market because the total market cap of the us equity markets is something like forty trillion dollars so five percent is two trillion i think that can price the securities.

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