Why I'm still optimistic about the economy despite the Index Fund Bubble

Published on Dec 07, 2019 in The Index Fund Bubble

Last update: Dec 16, 2019

Wait, I thought you were a pessimist?

If you’ve read the other posts in my Index Fund Bubble collection, you’re probably thinking that I’m a doomsdayer waiting for the economy to catastrophically collapse. That couldn’t be be further from the truth.

I’m actually extremely bullish on the long-term prospects of both the US and global economies. I haven’t put my life savings into gold bars that are stuffed inside my mattress. I’m still aggressively invested throughout a variety of asset classes where I think there’s potential for significant growth. In fact, most people would say my investments are significantly riskier than index funds, but I clearly disagree.

My pessimism is fully concentrated onto over-valued, stalling mid/large cap stocks that are controlled by Wall Street.

If you avoid large-cap stocks (and their debt), where do you invest?

I’ve started collection of posts focused on How I’m Invested if you want to read in more detail where I’m putting my money. In the meantime, my elevator pitch is that I avoid any assets (equity or debt) that are included in major index funds. That might sound limiting, but it isn’t as hard as it sounds.

It’s also important to note that I set a high hurdle rate of 20% annual return for my investments. That means I won’t put my money into something unless I think it has a good chance of clearing my hurdle rate. I constantly reevaluate my current investments and apply the same litmus test, selling anything that I don’t think can clear 20% looking 365 days out.

After the current debt cycle unwinds or the index bubble pops, I could do a 180 on my strategy and go back into index funds (or the companies within them). As a general rule, though, if you’re trying to achieve 20% annual returns, doing what everyone else is doing isn’t going to get you there. When the masses show up, that’s usually peak selling time.

This article is part of the The Index Fund Bubble Collection

1. Why I've liquidated my index fund portfolio

2. There's a Share Buyback Bubble looming over the horizon

3. Index funds consolidate corporate voting power into the hands of three Wall Street executives

4. Why I'm still optimistic about the economy despite the Index Fund Bubble

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