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Are we the baddies?

(geohot.github.io)
692 points AndrewSwift | 1 comments | 06 Jul 25 05:36 UTC | HN request time: 0.208s | source
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hardwaresofton ◴[06 Jul 25 07:54 UTC] No.44478703[source]▶
> If you open a government S&P 500 account for everyone with $1,000 at birth that’ll pay their social security cause it like…goes up…wait who’s creating this value again?

This is a good point. Some VCs were major proponents of this (and tons of other business people I'm sure), but this is of course just a guaranteed inflow into the largest companies and the companies that think they will be large some day. Yet another way to reallocate public cash to private companies.

Another similar example is UBI -- its proof of an economy that is not dynamic. It's a tacit approval and recognition of the fact that "no, you probably won't be able to find a job with dignity that can support you and your family, so the government will pay to make you comfortable while you exist".

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PartiallyTyped ◴[06 Jul 25 08:00 UTC] No.44478725[source]▶
It is an allocation to the biggest companies at any time.

ETFs need to rebalance, increase, decrease shares of a given stock and even evict them. Buying shares on SPY exposes you to the current companies but also any companies that will join.

If a company gets evicted, then there is massive drop in their stock pricing as most movement is mechanistic and done by ETFs.

Well massive is relative. For example last week we saw quite the drop in pltr after it was removed from russel2000.

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alecco ◴[06 Jul 25 12:36 UTC] No.44480251[source]▶
Hedge Funds call ETFs, pension funds, etc. "dumb money". I suspect they also feed the finance media narrative stating how on average they are not good at trading.
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1. PartiallyTyped ◴[06 Jul 25 12:59 UTC] No.44480446[source]▶
There’s money to be made alright, but I don’t think most retail traders are in the position to do that.

Technical analysis might as well be astrology. It treats tickers as isolated when in reality ETFs and growth of any individual stock in an ETF affects the flow in and out of other ETFs. When ETFs purchase stock due to an increase in value, they seek most liquid constituents first, and eventually rebalance. All these create feedback loops. The flow across the ETFs drives 80% of volume.

People would have higher performance if they learned about any particular sector, its movement and long term trends.

Retail has a lot of flexibility but people focus on trading over days instead of understanding trends and events of tomorrow, next year and the next decade.

Retail options “traders” barely understand the mechanics of at all, let alone the disadvantage they are in. They buy overpriced options with absurd premium that tanks during the chop induced by MMs. They don’t understand how MMs move/manipulate(not in the illegal sense)/shape the market to avoid losing money — they wouldn’t be in this position if they lost money. They just copy trades from traders on discord and hope to make some money.

ETFs are a great way to make money in terms of risk exactly of their rebalancing mechanics.

Everyone doesn’t have to beat the market, just beating inflation and leaving it in the bank is an improvement for the average person. Yes it won’t make people rich tomorrow, but they will be in a better situation next year or the one after than today.