John Mauldin has the big picture perspective of global economic trends to ask the difficult questions about societal change, inequality and automation of jobs. With the pervading need to monetize rising global debt, the Chairman of Mauldin Economics can only see a Bretton Woods type solution as the developed world starts to run out of difficult choices, while John also looks to the future of healthcare technology and the incredible breakthroughs in the pipeline. Filmed on May 22, 2017, in Orlando.
One Cause of Market Turbulence: Computer-Driven Index Funds
In many ways, this stampede toward passive investing — in which people put their money into funds that track indexes and broader market themes as opposed to relying on human stock pickers — is uncharted territory.
.. the key question is how this transformed market holds up during a financial storm that lasts more than a few days.
.. Cheaply priced exchange-traded and index funds .. They now own close to 40 percent of stocks in the United States
.. BlackRock.. is the leading issuer of exchange-traded funds, with $1.3 trillion under management
.. The popularity of E.T.F.s has concentrated unparalleled financial power in BlackRock and Vanguard, the two biggest providers of index funds and E.T.F.s. Together, they sit on $10.5 trillion in assets and control 65 percent of the 1,700 exchange-traded funds that exist.
.. As the flows have grown in volume, much of these funds have gone toward index heavyweights like Amazon, Apple and Facebook, pushing their valuations ever higher.
.. Active fund managers — human stock pickers .. because they are the ones who buy when others sell.