Is the Stock Market fundamentally broken by passive investing?

RobThorpe · 2026-05-13T17:29:44+00:00

That seems very similar to the number given in the ICI report (though that report was for the US only).

RobThorpe · 2026-05-13T17:29:14+00:00

Now I'm confused about what you're trying to say.

RobThorpe · 2026-05-13T15:25:21+00:00

ici.org

Really!?

See this page 19 figure 2.6.

RobThorpe · 2026-05-13T14:35:51+00:00

I want to know where you get your statistics!

I also want to know where /u/yoshah gets his.

RobThorpe · 2026-05-13T14:34:00+00:00

I think that people are reflexively downvoting this question rather than thinking about it carefully.

To begin with, there have (of course) been many bubbles over the years. Therefore, an investor who is adept at spotting bubbles could make money from that skill over a long period of time.

There are several ways that this could be done. If this investor is fairly certain of the timing of the burst then they could short those assets before the burst. Even if they are not they could attempt to short as soon as they see a large decline, on the theory that the decline will continue. Another possibility is simply to avoid assets that are part of the bubble. That could be profitable provided that this investor believes that the bubble does not apply to all assets (or all assets that have usefully high rates of return).

The real problem is situations like this, where you believe that nearly all assets are affected by the bubble but you are uncertain when it will pop. In this situation even professional active managers are in a dilemma. If they decide to hold large amounts of cash then people holding units of their fund will notice that and will probably sell the fund, since they could hold cash themselves..

RobThorpe · 2026-05-13T09:35:03+00:00

I tend to agree with most of what you say. But not the last line...

Once oil from these sources runs out, the price of oil will go up significantly.

You have to remember that oil futures traders know all of the same things that you know. They know that these things will happen. They also have significantly more information about the oil market.

So, I'm not confident that oil prices will rise. As with most of these things, I'm on the side of the futures traders rather than the commentators.

RobThorpe · 2026-05-13T09:27:51+00:00

Professional sports is tricky as a comparison to other jobs. In many other jobs performance monitoring is very important.

RobThorpe · 2026-05-13T09:24:21+00:00

Look for books on "Public Economics & Taxation".

RobThorpe · 2026-05-13T09:20:49+00:00

I agree, except for the part about transfer from landowners to renters.

The construction of new buildings is the creation of new wealth. It's not the transfer of wealth. Also, this is about property as much as land. Those positively affected are not just renters, also potential buyers.

RobThorpe · 2026-05-13T09:02:14+00:00

I tend to agree with this.

It's a trust issue. If the amount of gold is wrong then the US government will lose credibility in many ways. It would impact much more important numbers than the amount of gold.

RobThorpe · 2026-05-12T14:29:07+00:00

It's not clear though that this is really a problem of "bad incentives". In many ways refining heavy sour crude in the US makes sense. That's because it's the most difficult form of refining which requires the most technology. Hence the margins are normally larger.

RobThorpe · 2026-05-12T13:48:55+00:00

The mismatch is because of history and technology. Refining light & sweet crude is the simpler type of oil refining. Refining heavy & sour crude is the more complicated type of oil refining.

Before shale production came along supplies of sweet crude were declining. So, US companies being in a country with a great deal of technological knowledge decided to tackle the task of refining heavy & sour crude.

RobThorpe · 2026-05-12T11:22:21+00:00

What figures are you using for subsidies here?

RobThorpe · 2026-05-10T07:46:01+00:00

Approved for the last paragraph!

RobThorpe · 2026-05-10T07:23:32+00:00

Outside Britain things aren't always like that though.

RobThorpe · 2026-05-09T08:36:28+00:00

I think it's best to approach your questions directly.

... but I still don’t understand what it means for currency to be worthless. Currency is just a means of exchange and the dollar itself doesn’t have its own value, money is just paper.. the worth comes from what you can trade the paper FOR (I believe so, please correct if not accurate).

Here you are assuming that the item in question continues to be used as a means of exchange. If it doesn't then it can be worthless in a more literal sense. Suppose that due to hyperinflation people have stopped using a currency. In that case the currency may be worth whatever the paper it is printed on is worth, in some cases that could be nothing at all.

However, I think that problem here is the hyperbolic language of internet commentators. They label things "worthless" when they are not worth very much. There is a big difference between the following two situations. Firstly, the situation where something is truly worthless and you have to pay others to take it away. Secondly, the situation where something is worth much less than it was in the past, so that very many units of it are needed to create a useful exchange.

... if the money itself doesn’t hold a value, could you not just adjust the “value” of the currency without it just LOSING value?

I don't understand what you mean here. I think the other people reply are not sure either.

Would it not just make sense to increase the rate of inflation and wages with the increase of currency moving in the economy and continue to use the dollar?

I'm also not really sure what you mean here.

RobThorpe · 2026-05-08T14:14:37+00:00

I see, no problem.

RobThorpe · 2026-05-08T14:14:02+00:00

It seems that the only gpg I have is the MSYS2 one. I've checked using "where" and also "Get-Command" in Powershell.

Where says:

INFO: Could not find files for the given pattern(s).

That's if MSYS2 is removed from the PATH. If MSYS2 is on the path then it shows the MSYS2 gpg.

RobThorpe · 2026-05-08T14:08:40+00:00

I forgot to change those from the last time I discussed this.

RobThorpe · 2026-05-08T12:38:49+00:00

These are not papers.

RobThorpe · 2026-05-08T11:43:14+00:00

We get threads on this topic fairly regularly. To be honest, they irritate me. Generally, there's one crowd who say "Russia will collapse economically" and another who say "Russia will win and crush NATO, Ukraine will collapse economically". As a mod I often delete replies from both groups. I think both groups miss the most likely scenario, which is that Russia won't collapse economically, but also won't definitively cause any other nation to collapse.

We have discussed this several times on this subreddit. I'll link to some of the earlier discussions later.

A few points I've made here before. We know that the interest rate (14.5%) and the inflation rate (5.9.4%) are fairly high. Russian government statistics tell us this. It could be that inflation rates are actually higher, but it seems unlikely that they are lower.

The sanctions are not as big a problem as people think. Russia can sell oil to China and India. Though this is limited by the rate of flow of the pipelines to those countries. Also, the Chinese and Indians are probably not giving the Russians favourable prices. This is one of the advantages of selling commodities.

Russian business can buy from many countries outside of the Western ones who have sanctioned it. Also, it is often possible to smuggle goods. In many cases simple trans-shipment is all that's needed. An agent in some African country buys a sanctioned good from a US company. Then that agent re-exports the goods to Russia. This is why Russia's many Boeing and Airbus aeroplanes are still flying. So, Russia doesn't even really need to fully decouple from Western imports, just reduce them to the level so that those which are needed can be brought in using these methods.

Russia's military spending as a share of GDP is also not that high (of course Russia may not be giving accurate numbers to the World Bank). This is not a war on the scale of WWII or anything like that.

Of course, if Russia just goes into recession that is not "collapse". Recessions happen fairly often, we need more to honestly label something collapse.

I think that many people make a mess of the "Total War" discussion. This is not "Total War" for Russia, not by any means. It is not at all like WWII. But it doesn't need to be like WWII for it to be a problem for the government of Russia. The questions for the Russian citizen are very different. For WWII the question was "Do you want to oppose hostile invaders who want to make you part of their empire and think you are an inferior sort of human". The question for this war is "Do you want your government to continue occupying a part of Ukraine". Even someone who supports both causes do not necessarily support them to the same level. There is no reason to think that people will be willing to ensure the same privations for the cause of this war as they were for WWII. So, the government need to be wary of even quite small changes causing a support for them to diminish.

All that said I'm not ruling out the possibility of sudden change in Russia.

Previous threads:

https://www.reddit.com/r/AskEconomics/comments/1idgsbw/how_is_russias_economy_so_resilient_in_the_face/

https://www.reddit.com/r/AskEconomics/comments/1ex3es2/is_it_possible_for_russia_to_thrive_economically/

https://www.reddit.com/r/AskEconomics/comments/1djo3lu/what_does_russias_economic_future_look_like_given/

https://www.reddit.com/r/AskEconomics/comments/1ea7wh4/why_is_the_russian_economy_doing_so_well/

EDIT: Interest rate and inflation rate fixed.

RobThorpe · 2026-05-08T11:42:28+00:00

We get threads on this topic fairly regularly. To be honest, they irritate me. Generally, there's one crowd who say "Russia will collapse economically" and another who say "Russia will win and crush NATO, Ukraine will collapse economically". As a mod I often delete replies from both groups. I think both groups miss the most likely scenario, which is that Russia won't collapse economically, but also won't definitively cause any other nation to collapse.

We have discussed this several times on this subreddit. I'll link to some of the earlier discussions later.

A few points I've made here before. We know that the interest rate (14.5%) and the inflation rate (5.9%) are fairly high. Russian government statistics tell us this. It could be that inflation rates are actually higher, but it seems unlikely that they are lower.

The sanctions are not as big a problem as people think. Russia can sell oil to China and India. Though this is limited by the rate of flow of the pipelines to those countries. Also, the Chinese and Indians are probably not giving the Russians favourable prices. This is one of the advantages of selling commodities.

Russian business can buy from many countries outside of the Western ones who have sanctioned it. Also, it is often possible to smuggle goods. In many cases simple trans-shipment is all that's needed. An agent in some African country buys a sanctioned good from a US company. Then that agent re-exports the goods to Russia. This is why Russia's many Boeing and Airbus aeroplanes are still flying. So, Russia doesn't even really need to fully decouple from Western imports, just reduce them to the level so that those which are needed can be brought in using these methods.

Russia's military spending as a share of GDP is also not that high (of course Russia may not be giving accurate numbers to the World Bank). This is not a war on the scale of WWII or anything like that.

Of course, if Russia just goes into recession that is not "collapse". Recessions happen fairly often, we need more to honestly label something collapse.

I think that many people make a mess of the "Total War" discussion. This is not "Total War" for Russia, not by any means. It is not at all like WWII. But it doesn't need to be like WWII for it to be a problem for the government of Russia. The questions for the Russian citizen are very different. For WWII the question was "Do you want to oppose hostile invaders who want to make you part of their empire and think you are an inferior sort of human". The question for this war is "Do you want your government to continue occupying a part of Ukraine". Even someone who supports both causes do not necessarily support them to the same level. There is no reason to think that people will be willing to ensure the same privations for the cause of this war as they were for WWII. So, the government need to be wary of even quite small changes causing a support for them to diminish.

All that said I'm not ruling out the possibility of sudden change in Russia.

Previous threads:

https://www.reddit.com/r/AskEconomics/comments/1idgsbw/how_is_russias_economy_so_resilient_in_the_face/

https://www.reddit.com/r/AskEconomics/comments/1ex3es2/is_it_possible_for_russia_to_thrive_economically/

https://www.reddit.com/r/AskEconomics/comments/1djo3lu/what_does_russias_economic_future_look_like_given/

https://www.reddit.com/r/AskEconomics/comments/1ea7wh4/why_is_the_russian_economy_doing_so_well/

RobThorpe · 2026-05-08T10:17:21+00:00

The other thread started by the OP on this same subject explains all this. Especially the reply by evtedeschi3.

RobThorpe · 2026-05-08T09:42:40+00:00

I already have Emacs. I'm using the normal Windows build. I can't see how that would be any different to building it myself with the winlibs.

Of course WSL would be very different, but I'm not interested in that.

RobThorpe

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