SINGAPORE (July 3): Economic and stock market crashes are inevitable. But you never know when and how. It’s like death. Until it happens, you’ve got to live as well as you possibly can. It’s the same with investing.
Last week, we noted how it is impossible to predict market directions. Even if the optimists are right — that the world is in secular deflation and digital transformation will drive economic growth and corporate earnings much higher — the fact is that, even in long-term up cycles, there will still be short-term swings.
In particular, what is really worrying is the way passive funds, including exchange-traded funds (ETFs), have grown. As mentioned last week, the attractiveness of its low costs is also its Achilles heel.