Are Index Funds Safe From A Stock Market Crash?

Are Index Tracking Funds a Safe Investment? Not according to Michael Burry, the legendary investor featured in the book and movie, The Big Short, who is predicting a 2008-style crash. American Michael J. Burry is a physician, investor, and hedge fund manager. He was the founder of the hedge fund Scion Capital, which he ran from 2000 until 2008, before closing the firm to focus on his own personal investments. Burry made a fortune betting against CDOs before the 2008 financial crisis and his estimate net worth is $250 million. He currently manages over $100 million in his own fund. In an interview with Bloomberg, Burry said index fund inflows (investment money) are distorting prices for stocks and bonds in much the same way that CDO purchases did for subprime mortgages over a decade ago. The flows will reverse at some point, he said, and “it will be ugly” when they do. “Like most bubbles, the longer it goes on, the worse the crash will be,” said Burry, who oversees about $340 million at Scion Asset Management in Cupertino, California. One reason he likes small-cap value stocks: they tend to be under-represented in passive funds. Here’s what else Burry had to say about indexing, liquidity, Japan and more. Comments have been lightly edited and condensed...See full article at www.moneytipsdaily.com Word of the Day Index and Tracker Funds An index or tracker fund is an index fund that tracks a broad market index or a segment thereof. Tracker funds are also known as index funds. These funds seek to replicate the holdings and performance of a designated index. Tracker funds are designed to offer investors exposure to an entire index at a low cost. Source: Investopedia. There are more examples and practical steps to getting rich and being happy in my book, Yes, money can buy happiness, I cover the 3 R’s of Money Management, the Money B.E.L.I.E.F System and much more. Check it out on Amazon http://bit.ly/2MoneyBook. See more at www.moneytipsdaily.com: More Recession Warning Signs Should you be buying Gold? 3 Myths of Property Investment Creative Finance Tools for Owning or Controlling Property