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Originally Posted by Cappy
I think there is more to this market than just tariff uncertainty. The US has been seeing a growing gap in inequality and the lower classes are stretched thin. The longer this continues without a fix (and Trump ain't fixing that) then the bigger the issue becomes.
Coupled with the massive increases in stock market caused by retailer investors, sooner or later a lot of that money is going to get pulled out. The issue is so many of those investors bought ETF's (as did almost all of us i am sure).
ETF funds don't hold cash. When a customer withdraws their money from ETFs they have to sell those shares (worse if its a derivative ETF) which can cause a huge swing in stock prices.
I can see a huge swing sometime this year, ala 2008. Am i prepared to convert all my investments into cash? no. But Im currently at about 35% cash
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Just on the ETF point - Not entirely true. Most ETFs hold a small amount of cash for liquidity and operational purposes. However, they are typically fully invested in their underlying assets to track their benchmark index effectively. When an investor sells an ETF on the stock exchange, they are selling it to another market participant, just like a regular stock. This doesn’t directly impact the ETF’s holdings. The large ETFs are relatively cushioned against this and don't often have to rely on the market makers to redeem issued ETF shares.