caprock, I would not recommend investing in the stock market at all, and standard disclaimer, this is not financial advice; you are responsible for your own due dilligence... yada... that said.
The stock market no longer meets the requirements to be considered an investment, using Benjamin Graham's definitions. While it seems like it has no where to go up, this is an illusion, and most of the smart money has diversified or left the stock market completely.
Rule number one of investing is, don't lose your principal. The market has for almost 3 years now, been approaching irrational exuberance indicating it may be at the top of an everything bubble.
There is no visibility on the leverage, and updates to the valuation of an ETF more likely than not will not follow even the underlying portfolio valuation.
For a perfect example, thanks to the YTM loophole in reporting, the main ETF that follows bonds didn't see a severe correction (to the downward valuation) while interest rates were going up despite the fact that the underlying of the fund lost 1/3rd of its value almost overnight using standard financial math valuation for bonds in changing interest rates. The higher interest rates being offered by the Fed dropped the price of all existing, for the underlying, and at the time it was roughly 99% US 30Y bonds iirc at 1.5%. The ETF traded at 115 per share. 2 years later in a 4.5% available bond, it had only dropped to 108/share. Despite book value of the underlying having lost significant value, they claim its updated daily based on market conditions, but they follow the YTM loophole to avoid marking to market the underlying; along similar dirty lines as the Libor rate scandals.
Additionally, there is no visibility, or for that matter safeguard against someone crashing your investment and stealing your money through options. Many of the entities involved are tangentially related to middlemen who have the exclusion for creating synthetic shares (out of nothing).
I'm sure you've seen some of the GME stuff that's been going on over the years, the functional component is options, that may be pushed out in perpetuity. The fact that the underlying aggregate is shorted more than the shares in existence, should cause a short squeeze normally. That would normally cause the price to go up in a short squeeze, but when you can create synthetic shares into existence that doesn't happen and they capture the profit both ways, while tamping down the squeeze. Any big player can utilize PFOF, and yield farming to steal your money.
Invest in something tangible, with cashflow, where you've done the research.
There are just too many ways for you to lose everything from bad actors in the stock market, and the SEC is helpless to go after the people involved since its a systemic problem at the top, it is a captive system, where putting you money into it is volunteering for it to be stolen; with the hope that you'll make some money, and the fear that you'll miss out.
I was referring to this: “most of the smart money has diversified or left the stock market completely.” How do you know where “most of the smart money” has gone? Which investors are you looking at?
There are distortions in market sectors between main street and wall street, if one knows where to look, and what to look at.
You nearly always see buying sprees towards real assets when there are bubbles that are about to pop.
Whether that spree is in terms of buying companies (for cash flow), or real assets like real estate, mines, etc (i.e. blackrock buying up large swathes of housing, and engaging in acts that might be construed as price fixing rents; i.e. constraining supply letting housing they've purchased remain vacant) etc.
You follow the money, and pay attention to the upstream, actually productive companies that are inputs to the other companies.
Price can remain the same, or drop slightly when there are outflow trends. Those outflows can also be laundered as option contracts, which may prop up the underlying until the expiration. Many, probably even most, of the companies today on the Russel, and 500 are zombified. Cascade failures in inputs, from a credit or liquidity crunch are common and predictably worse for any company carrying high leverage ratios (which are most).
This is the kind of destructive and blind magical thinking that gets people into trouble, and ruins lives.
There are boundaries on how much you can inflate before it causes cascade failures at a societal level. We've already hit a number of them, and stagflation indicators we have already seen will force interest rates low very soon, but at the same time balloon hyperinflation because the deficit spending rate and interest on old debt exceeds growth (GDP annually).
Being dependent on foreign goods due to systemic lack of local manufacturing creates similar conditions as previously seen in the Weimar Republic.
Ray Dalio's Bridgewater Associates wrote a report and case study called Big Debt Crises. They make the argument for beautiful deleveraging but their conclusion about that neglects boundary conditions imposed by producers, and consumers in concentrated markets.
The aggregated data in this report makes a sound argument against the conclusion that you can print indefinitely.
Its a matter of what breaks first, producers or consumers. At the point consumers can't get food, unrest occurs violently, this prompts stockpiling, shortages ensue and self-sustain. Economic collapse is not that long after.
The stock market no longer meets the requirements to be considered an investment, using Benjamin Graham's definitions. While it seems like it has no where to go up, this is an illusion, and most of the smart money has diversified or left the stock market completely.
Rule number one of investing is, don't lose your principal. The market has for almost 3 years now, been approaching irrational exuberance indicating it may be at the top of an everything bubble.
There is no visibility on the leverage, and updates to the valuation of an ETF more likely than not will not follow even the underlying portfolio valuation.
For a perfect example, thanks to the YTM loophole in reporting, the main ETF that follows bonds didn't see a severe correction (to the downward valuation) while interest rates were going up despite the fact that the underlying of the fund lost 1/3rd of its value almost overnight using standard financial math valuation for bonds in changing interest rates. The higher interest rates being offered by the Fed dropped the price of all existing, for the underlying, and at the time it was roughly 99% US 30Y bonds iirc at 1.5%. The ETF traded at 115 per share. 2 years later in a 4.5% available bond, it had only dropped to 108/share. Despite book value of the underlying having lost significant value, they claim its updated daily based on market conditions, but they follow the YTM loophole to avoid marking to market the underlying; along similar dirty lines as the Libor rate scandals.
Additionally, there is no visibility, or for that matter safeguard against someone crashing your investment and stealing your money through options. Many of the entities involved are tangentially related to middlemen who have the exclusion for creating synthetic shares (out of nothing).
I'm sure you've seen some of the GME stuff that's been going on over the years, the functional component is options, that may be pushed out in perpetuity. The fact that the underlying aggregate is shorted more than the shares in existence, should cause a short squeeze normally. That would normally cause the price to go up in a short squeeze, but when you can create synthetic shares into existence that doesn't happen and they capture the profit both ways, while tamping down the squeeze. Any big player can utilize PFOF, and yield farming to steal your money.
Invest in something tangible, with cashflow, where you've done the research.
There are just too many ways for you to lose everything from bad actors in the stock market, and the SEC is helpless to go after the people involved since its a systemic problem at the top, it is a captive system, where putting you money into it is volunteering for it to be stolen; with the hope that you'll make some money, and the fear that you'll miss out.