@@gavinwelsh4534 Great question. The FCA's definition of guidance covers such activities (I have linked the full details below if you wish to read them). We are also partnered with financial advisors who attend in-person sessions and provide support to employees but, crucially, are not there trying to get everyone to invest in their funds. Which is the motivation of most advisors when they enter workplaces. Our focus is on education in the same way this channel is. www.fca.org.uk/publication/research/fawg-consumer-explanations-advice-guidance.pdf
@@gavinwelsh4534I thought you might be and again thank you for asking the question because it’s an important one and honestly it’s something I have pondered IFAs do amazing work; I see them as a key part of making this work. I’m not looking to replace them But I want to remove the AUM incentive and focus on education. That way, we can make sure staff get a base-level understanding of things like their pension and also provide access to IFAs for more complicated or specific advice. My main aim is to bring as many people as possible up to the level where they can confidently say they understand what their pension does and why they are in the funds they are, as well as the other basic but essentially personal finance areas that are often lacking.
@@DamienTalksMoney I think the solution is for companies to pay for the IFAs time to provide such educational seminars. The problem is that smaller pots on an individual basis are not commercially viable. It’s a ticking time bomb the lack of money being saved in general.
The "high concentration" in the index doesn't really increase risk even if all the top companies were in the same sector. You hold the index long term, but the index doesn't hold companies long term. If some change happens in the future that means a lot of these big companies become irrelevant, then the index will start to sell them off and it will start buying the new companies that people will use instead.
@@DamienTalksMoneyNever say never! Despite the fact that I agree with you - it does seem extremely unlikely but it's always possible, for example one of the main focus areas for AI must be in trading and investing, so if someone creates a better solution, everyone will flock to it
Presumably index funds will have been selling Tesla as the stock goes down. In my experience picking promising shares and watching them rise is easy. Knowing when to reduce your holding is the difficult part. I wonder how many people with Tesla stock are now increasing their holdings saying "It will soon be back to an all time high".
Hi, i dont know if youve mentioned this but, once a company loses its dominance in the market. it will leave an index fund and be replaced by the next best thing. hence top 500 top 100 top 30 etc. ergo. it'll always be the biggest best performing companies you own. love your vids correct me if I'm wrong
Index funds are fundamentally dollar (pound) cost averaging - they must invest as an individual stock is rising and they sell (take profit) as it falls, reinvesting in another growing stock. It's a virtuous circle driven by rebalancing the portfolio. In effect, the same thing applies whether the fund is market-cap weighted, or equal-weighted.
According to an article in the Times today, 17 companies in the FTSE 100 have increased their dividend each year for the last 10 years. If you would have invested 10 years ago, you would have got a total return of 281%. According to my calcs this represents an annualised return of 14.3% per year.
The whole point of investing in the S&P 500 is that it’s the biggest and best 500 companies. The better performing companies ( and sectors ) will replace the less successful. Relax and keep in investing in the S&P 500 …. Given America is currently most of the global market. And most of the S&P 500 companies get large profits from the global market. It may change BUT it’s not going to happen anytime fast
What a roller coaster video! (Excellent and insightful as always). Almost changed my strategy mid way, but brought it back to the ground at the conclusion. Slow, consistent, and steady is the way and trust the process. There are no crystal balls in this game.
@DamienTalksMoney Don't apologise, its grounding and a reminder. It's Bank Holiday tomorrow. A few drinks and a weak mind. Appreciate everything you're doing. Keep knocking it out of the park pal.
I'm confused. So Super Micro recently joined the S&P500, so does that knock one of the existing companies off it as there are only 500? What happens with my index fund? Are the shares in the company removed sold and the money spent buying Super Micro shares. I guess I'm trying to understand how these index funds track the actual 500 companies share prices.
I suspect many investment funds are or will be managed by AI in the future. Very suspicious of investment companies that are pushed through TV advertising a lot offering cheap management rates.
If the majority of active investors are selecting companies within the SP500 that would mean that any shift out of a company like Tesla would lead to a shift into a company that you already hold, essentially it's money moving within the index not out of it.
Yep, half of my Long Term portfolio is a few different ETFs and that side will continue to grow as I add to them, instead of my fairly safe individual blue chip stock picks going forward.
Thanks Damo. Really interesting re: tech monopolising the retail space. Its something we could have probably predicted. But isn't a investment fund fluid- as in - if one sector liquidates, the fund automatically deversifies into the next big 7?
It would actually benefit companies like Tesla unless someone like BYD comes up with a built in Mr Fusion on their vehicle. Further up the thread someone else has mentioned healthcare. I don't see how Commercial Fusion would have any effect on that and the companies involved.
I'm not sure I understand why you lumped "mergers and acquisitions" in with companies failing. Always nice to buy shares of a company that gets bought out
Looking back historically is interesting, however one thing where there is a significant contrast is with regard to FUM flow. In more recent times, i.e. last 15 or so years, there has been a proliferation of funds allocated to indexing strategies. Now over 50% of the market I read. With this large amount of money following the same strategy, what impact (if any) is this having on price discovery, constituent liquidity and the EMH? Could this be (or is it already) problematic? I feel that this needs to be better understood. Thoughts?
the problem today is the mag 7 are way too big to fail, they buy and eat up any small business competition. And they say we don't have a monopoly! I call BS!!
I think it’s different time for tech titans and those like Nvidia are just starting their journey. We’re looking them for example as one being out there for long time and at peak, while they are just at the beginning leading change in new tech areas, and who knows what it brings. While those companies innovate, innovation is the key, it is safe terrain. Once they stop for 5-10 years, then shit will hit the fan, but we’re far far far away as we are in the middle of tech transformation and revolution with ai, semiconductors, electric cars and so on…
The thing about global index funds, is they are not global. If people can accept that risk of less diversification, then all is well. The thing is though there are tech specific index funds that well outperform pretty much all global index funds. Another thing to think about.
I've had 24 hours to digest what you said in this video, and I think it's nonsense. Yes 7 companies dominate indexes, and that on the face of it is a huge risk - if you bought them directly that is. You forgot to mention index funds are dynamic. If and when the Magnificent Seven falls from grace, the index funds will automatically pick up the next leader without you doing anything. While they do pose a risk if they were to suddenly crash without notice, anyone being replaced gradually is not a risk your video is suggesting. The index fund will just hold exactly the same percentage of the new leaders when that happens. Automatically.
QUESTION. People are buying the index at a given point. The index fund is continuously behind the scenes on a daily basis rebalancing to reflect the index. Thus if an investor bought the index many years ago and sells it today it is entirely possible the companies in the index are entirely different. Yet the index investor can sell even though the index contains companies that didn’t even exist when the position was entered. So don’t index funds holdings evolve with the index? So no loss if gradually a company fads and another replaces it. The real problem is if everyone only used index as a means to invest in companies then their share price would stop reflecting performance and represention would remain constant.
I think you are spot on. In fact, I believe that one of the reasons that passive funds are able to match or exceed the performance of active funds is that continual rotation of their investments - out of those that are under-performing the index and into those that are outperforming the index (the capital valuation of the stocks is growing faster than the overall index). This is essentially a very efficient dollar (pound) cost averaging process, buying on the way up and selling (usually at a profit on the way down. You are probably correct that if everyone simply applied the index funds methodology the market would potentially become stagnant (or, more accurately, becalmed). The reason this is unlikely to occur is that markets are not driven by small private investors, they are driven by professional commercial investors such as pension funds and insurance companies, who are currently more than two thirds of the market. Even a proportion of private investors are actually amateur traders, who are trying to do better than the market average. The only problem is that typically, 70% of them lose.
If these tech giants fail, we have 1929 type economic crissis. But if they fail it will be because of new more important companies and technologies like AI and Quantum computing, which they already research and plan to integrate to not fail. So I would say that we are heading to a cyberpunk dystopiaish in which tech giants hold most of the value.
@@DamienTalksMoney if you are taking requests, I'd like to hear your view on vanguards lifestrategy 100 now that vanguard have changed the way they weight it. 👍
If you are taking requests - how about a video on emerging markets - with China potentially un-investable - should investors focus on developed markets index funds like Ramin is doing ? Great videos btw Damien !
Great video as usual. I hope companies use your support. I have just started to invest and am using different platforms for different reasons. The Lifetime Investment ISA is my biggest concern. These videos are giving me more knowledge.
That's right and if using a passive tech fund, it doesn't matter if Apple/MS are currently dominant because such an index will be self cleansing, You are investing in the sector of technology which, as you say, if that fails, we have bigger problems in our everyday lives to worry about.
No I don’t think so. Not in an election year anyway, considering that the US government has got $6 trillion worth of stimulus going at the moment. however, 2025 is a different situation.
Great content as usual Damien. I've just switched from normal S&P 500 to equally weighted as I think the froth will be knocked off the top of the Mag 7. The chart over the last couple of years between these 2 investments are quite interesting and you did touch on it in this video. Perhaps needs a short video of its own?
Reminds me of a joke I heard: My favourite TECH etf is vanguard global all cap! That being said I invest in VHYL for a bit of diversity and yes dividends.
I tried to find an ETF that excluded the 7. Can't find one in that's available in the UK. If anyone knows give me a shout. I went all in on the SP400 last week to keep myself in the game
But if the Global market IS TECH, then what's wrong with that ?? It doesn't look like it's going to change anytime soon. If anything, it will get bigger and bigger.
Great video as usual Damien. I now invest in a Global Index Fund based on your videos and just discovered the Making Money pod. It would be amazing if a Shared AVC video was on radar because really interested in one of these as a work based benefit 👍
@damientalksmoney Could you do a video explaining how in index fund tracks the S&P500. Like over time companies move in and out of it, but your investment is tracking the index so how is it affected when there are changes in the companies that make up those 500.
Since the inception of the S&P 500 in 1957 on *average* it has performed over 10% year on year. Personally I don’t see that changing with the pace of innovation. I think other emerging sectors that will become big are space exploration and bio sciences as the human race moves forward.
Forgive my inexperience as I'm just about to start my investing journey (after a few months of slow research), but are the "against" points in the video really targeted at investing in small groups or individual companies? Surely if I invest in the global index, if one company takes a downturn then it's pretty likely they'll at some point be replaced with another, well performing company? Or is the key point that these "tech" (as you creatively put it) companies have such market weight that if they were to have a significant downturn, it would rattle the entire economy too hard? Ie. If the magnificent 7 all started declining, this would send ~30% of the S&P500 into decline.
A great and well balanced vlog. I think you would be great teaching in schools, let's get our kids financially educated, but do governments really want the masses financially educated, I don't think so.
Great business idea!!! I would really like you and Martin Lewis on a weekly Money show main stream tv or on here!! And perhaps Nisha as well, dragons den sarah - that would be amazing!!
I know its the view of an investor but a company doesn’t fail just because it loses value. Eventually every company is over valued. I also feel like the % of market cap and returns factors in dividends.
These big companies will fail… for something else. The indexes are self regulating, the composition changes over time but they still capture the growth of any future winners. Short term we may see a big correction but in the long run the market will be larger. Stress less, invest more. Quoting Dory from Nemo: “Just keep swimming, just keep swimming”.
Dory is a great metaphor for passive investing. Don't need to be very smart or have a good memory, just keep swimming and you'll beat the rest of the sea life to your goal.
Yep, I was thinking exactly the same healthcare and biotech aided by AI will boom. But that’s the beauty of an index fund. These players are already in the mix. Thermo and Waters provide equipment for these industries and look where they are in the S&P 😉
Active investors make the index funds work, if for example Apple is over invested by index funds then active investors will start selling Apple that's why u can't speak of a bubble in index funds because there's still a lot of active investors who will even it out, and there probably always will be.
Thank you for watching all the way to the end and then taking the time to like and leave a comment. Comments like this are the exact reason I try to get a little creative sometimes
Stocks are falling and bond yields are rising, but markets still don’t seem convinced the Federal Reserve will pursue plans to keep increasing interest rates until inflation is under control. I'm still at a crossroads deciding if to liquidate my $117k stocck portfolio, what’s the best way to take advantage of this bear market? £
Yep blame the execs puffing up valuations Tech should be only companies that sell software (preferably exclusively Amazon). People hear tech, they are thinking primarily Google, Amazon, Microsoft style companies. Hardware has completely different risks, overheads, scalability, per user cost to software. Amazon is a cloud services company with a retail business on the side. (Look at operating profits from AWS) Side note at end. Tesla is not a tech stock, and comparing to other car manufacturers is blatantly absurd. I work automotive software in uk. I am definitely an ev truer believer and have spent my working life exclusively working with EVs. The recent gloom around index’s almost convinced me just due to the high weighting of Tesla.
You are Amazing! For 50 years I was a teacher. For 40 of them at the Institute of Education, University of London. I worked in international distance learning. You and Ramin and no doubt some other genuine FinTech TH-camrs are changing this world for the better as 21st century educators. You are the pioneer teachers of this new wonderful, dynamic and dangerous century. There is one bit of knowledge that counts for more than all the others - to find out and learn and master something for oneself. But we all need people to offer a helping hand a mentor, a coach or guide. We all need to win in some way - Tommy needed Jimmy and vice versa - c.f. the climbing analogy. Keep going, your vision is a much needed one. How you get there will be a wild ride. But it will always be interesting. I wish I had another 50 years to help change this world some more.
I do worry a little that the market is dominated by so few companies, but I'm not really worried that it is dominated by the tech sector. I really can't see how it would revert back to one of the previous dominant sectors any time soon. More likely it would evolve into some sector that doesn't even exist yet, which will probably still be heavily centred on tech.
I think the issue for these big tech stocks is that they will (or already have) become so big that they cannot grow at the same rate as they had before. Also that a lot of that future growth is already in the price. They might still make tremendous amounts of money going forward, but the share price might grow slower than the rest of the market. Your end point about tech now being in everything...I do wonder if there is a paradigm shift because the source of that "tech" to power all the innovation is being dominated by a few companies, and since they have so much money it's hard to see that changing much because they can simply buy upstarts or copy and outcompete them with all their innate advantages (like Microsoft usually does). For example, there are only a handful of companies that make processors but there will be a gigantic need for more processors to power the kinds of future tech that will be incorporated widely. Same with data centers. We'll likely see the same with AI. A handful of companies will provide most/all of these, and unless they get broken up it's hard to see any way that they won't continue to be dominant.
I see the S&P 500 somewhat as a washing machine spinning round, the mix of what's in there and what's at the top at any given moment is less relevant to the growing pile of laundered clothes you have over time or wealth over the long term. (Ok, that metaphor got a bit weird 😂)
The main point is that our investments are constantly changing, so the index is changing depending on how companies are doing so even if some of these businesses will go bust, they'll be replaced, so that's fine
My concern is less with the concentration of these companies in the indices but rather their overvaluation. Large cap growth is a sucker’s bet. I wouldn’t invest in these large tech companies as “stock picks” so I don’t want them to dominate my index portfolio. I personally tilt slightly towards value factor funds (especially at historically high valuations).
For more info on what I discuss at the end please email
Will@damientalksmoney.com
Hi mate
Great idea re providing advice to employees and employers of businesses but may I ask what makes you qualified to give this advice?
@@gavinwelsh4534 Great question. The FCA's definition of guidance covers such activities (I have linked the full details below if you wish to read them). We are also partnered with financial advisors who attend in-person sessions and provide support to employees but, crucially, are not there trying to get everyone to invest in their funds. Which is the motivation of most advisors when they enter workplaces. Our focus is on education in the same way this channel is.
www.fca.org.uk/publication/research/fawg-consumer-explanations-advice-guidance.pdf
I’m an IFA myself, so that’s why I asked. There is a massive gap in terms of auto enrolment and employees and employers been informed
@@gavinwelsh4534I thought you might be and again thank you for asking the question because it’s an important one and honestly it’s something I have pondered
IFAs do amazing work; I see them as a key part of making this work. I’m not looking to replace them But I want to remove the AUM incentive and focus on education.
That way, we can make sure staff get a base-level understanding of things like their pension and also provide access to IFAs for more complicated or specific advice.
My main aim is to bring as many people as possible up to the level where they can confidently say they understand what their pension does and why they are in the funds they are, as well as the other basic but essentially personal finance areas that are often lacking.
@@DamienTalksMoney I think the solution is for companies to pay for the IFAs time to provide such educational seminars.
The problem is that smaller pots on an individual basis are not commercially viable.
It’s a ticking time bomb the lack of money being saved in general.
The "high concentration" in the index doesn't really increase risk even if all the top companies were in the same sector. You hold the index long term, but the index doesn't hold companies long term. If some change happens in the future that means a lot of these big companies become irrelevant, then the index will start to sell them off and it will start buying the new companies that people will use instead.
I'm almost 29 and I've just started to learn about investing. Your videos have been an amazing help! Thank you Damien!
Never too late to start!
Same here at 44, though mate. Let's go 👍🙏👊
Same. 29 myself.
Nice one Damo, I was afraid you were going to give me a genuinely compelling reason to stop investing in global index ETFs. Thankfully not 😂
Never going to happen mate.
What? Now I gotta finish watching
@@DamienTalksMoneyNever say never! Despite the fact that I agree with you - it does seem extremely unlikely but it's always possible, for example one of the main focus areas for AI must be in trading and investing, so if someone creates a better solution, everyone will flock to it
Presumably index funds will have been selling Tesla as the stock goes down. In my experience picking promising shares and watching them rise is easy. Knowing when to reduce your holding is the difficult part. I wonder how many people with Tesla stock are now increasing their holdings saying "It will soon be back to an all time high".
@MrDuncl " easy " . OK.
Production values on these videos have gone up quite a few notches. Great content and great presentation. 👌
Was about to say the same. Banger of a video.
Hi, i dont know if youve mentioned this but, once a company loses its dominance in the market. it will leave an index fund and be replaced by the next best thing. hence top 500 top 100 top 30 etc. ergo. it'll always be the biggest best performing companies you own. love your vids correct me if I'm wrong
Index funds are fundamentally dollar (pound) cost averaging - they must invest as an individual stock is rising and they sell (take profit) as it falls, reinvesting in another growing stock. It's a virtuous circle driven by rebalancing the portfolio. In effect, the same thing applies whether the fund is market-cap weighted, or equal-weighted.
According to an article in the Times today, 17 companies in the FTSE 100 have increased their dividend each year for the last 10 years. If you would have invested 10 years ago, you would have got a total return of 281%. According to my calcs this represents an annualised return of 14.3% per year.
Doesn’t bad performing stocks get removed from index funds and replaced with more favourable stocks?
yep just like everton , forrest and eventually man city down they go
S&P have built in rules to ensure they are profitable but I don’t think ftse have the equivalent??
🤣🤣🤣🤣
@@hachimaru295Forest and they won’t be going down
#miraclemen
⭐️⭐️
The whole point of investing in the S&P 500 is that it’s the biggest and best 500 companies. The better performing companies ( and sectors ) will replace the less successful. Relax and keep in investing in the S&P 500 …. Given America is currently most of the global market. And most of the S&P 500 companies get large profits from the global market. It may change BUT it’s not going to happen anytime fast
What a roller coaster video! (Excellent and insightful as always). Almost changed my strategy mid way, but brought it back to the ground at the conclusion. Slow, consistent, and steady is the way and trust the process. There are no crystal balls in this game.
Never change the process! Sorry I took you on a roller coaster ride 🤣
@DamienTalksMoney Don't apologise, its grounding and a reminder. It's Bank Holiday tomorrow. A few drinks and a weak mind. Appreciate everything you're doing. Keep knocking it out of the park pal.
The saddest thing about being self employed is I forget the bank holidays and don’t have the joy of them anymore
Thanks Damien. Honest, concise, informative, unbiased...with a dash of humour... Love it.
Video posted only 2 months ago and not a single mention of NVDA. Proves his point.
I'm confused. So Super Micro recently joined the S&P500, so does that knock one of the existing companies off it as there are only 500? What happens with my index fund? Are the shares in the company removed sold and the money spent buying Super Micro shares. I guess I'm trying to understand how these index funds track the actual 500 companies share prices.
I suspect many investment funds are or will be managed by AI in the future. Very suspicious of investment companies that are pushed through TV advertising a lot offering cheap management rates.
If the majority of active investors are selecting companies within the SP500 that would mean that any shift out of a company like Tesla would lead to a shift into a company that you already hold, essentially it's money moving within the index not out of it.
Seriously impressive video: deep and considered technical market analysis put across in a clear and down to earth manner. That’s skilled work
Top video Damo, very thoughtful with real data and clear explanations. Thank you!!
Yep, half of my Long Term portfolio is a few different ETFs and that side will continue to grow as I add to them, instead of my fairly safe individual blue chip stock picks going forward.
Thanks Damo. Really interesting re: tech monopolising the retail space. Its something we could have probably predicted. But isn't a investment fund fluid- as in - if one sector liquidates, the fund automatically deversifies into the next big 7?
You are wise beyond your years Grasshopper.
Have you looked into Commercial fusion? The impact on funds globally will definitely be something. The cost/price of all goods will go to near-zero.
It would actually benefit companies like Tesla unless someone like BYD comes up with a built in Mr Fusion on their vehicle.
Further up the thread someone else has mentioned healthcare. I don't see how Commercial Fusion would have any effect on that and the companies involved.
But what if your wrong! And the market tanks along with your investments. The SNP is very overvalued
FTSE is underpriced
@@jillybe1873 yes it is but it's not well in a long time and if the rest of the markets drop do you think the UK market will improve. I doubt it.
on form! good luck with the venture too.
6:07 this is REALLY interesting! Glad that i was randomly recommended this video
Great content Damo, very well researched and presented.
Thank you!
I'm not sure I understand why you lumped "mergers and acquisitions" in with companies failing. Always nice to buy shares of a company that gets bought out
Looking back historically is interesting, however one thing where there is a significant contrast is with regard to FUM flow. In more recent times, i.e. last 15 or so years, there has been a proliferation of funds allocated to indexing strategies. Now over 50% of the market I read. With this large amount of money following the same strategy, what impact (if any) is this having on price discovery, constituent liquidity and the EMH? Could this be (or is it already) problematic? I feel that this needs to be better understood. Thoughts?
the problem today is the mag 7 are way too big to fail, they buy and eat up any small business competition. And they say we don't have a monopoly! I call BS!!
I think it’s different time for tech titans and those like Nvidia are just starting their journey. We’re looking them for example as one being out there for long time and at peak, while they are just at the beginning leading change in new tech areas, and who knows what it brings. While those companies innovate, innovation is the key, it is safe terrain. Once they stop for 5-10 years, then shit will hit the fan, but we’re far far far away as we are in the middle of tech transformation and revolution with ai, semiconductors, electric cars and so on…
Great stuff. Legal and General Global 100 Fund does the job for me.
Merging or being purchased is NOT failing.
The thing about global index funds, is they are not global. If people can accept that risk of less diversification, then all is well. The thing is though there are tech specific index funds that well outperform pretty much all global index funds. Another thing to think about.
Index funds might be risky, but other options are even more risky - look at how badly bonds have done recently.
Is Invesco FTSE all world still your play?
I've had 24 hours to digest what you said in this video, and I think it's nonsense.
Yes 7 companies dominate indexes, and that on the face of it is a huge risk - if you bought them directly that is.
You forgot to mention index funds are dynamic. If and when the Magnificent Seven falls from grace, the index funds will automatically pick up the next leader without you doing anything.
While they do pose a risk if they were to suddenly crash without notice, anyone being replaced gradually is not a risk your video is suggesting. The index fund will just hold exactly the same percentage of the new leaders when that happens. Automatically.
So interesting thank you for sharing!
QUESTION. People are buying the index at a given point. The index fund is continuously behind the scenes on a daily basis rebalancing to reflect the index. Thus if an investor bought the index many years ago and sells it today it is entirely possible the companies in the index are entirely different. Yet the index investor can sell even though the index contains companies that didn’t even exist when the position was entered.
So don’t index funds holdings evolve with the index? So no loss if gradually a company fads and another replaces it.
The real problem is if everyone only used index as a means to invest in companies then their share price would stop reflecting performance and represention would remain constant.
I think you are spot on. In fact, I believe that one of the reasons that passive funds are able to match or exceed the performance of active funds is that continual rotation of their investments - out of those that are under-performing the index and into those that are outperforming the index (the capital valuation of the stocks is growing faster than the overall index). This is essentially a very efficient dollar (pound) cost averaging process, buying on the way up and selling (usually at a profit on the way down.
You are probably correct that if everyone simply applied the index funds methodology the market would potentially become stagnant (or, more accurately, becalmed). The reason this is unlikely to occur is that markets are not driven by small private investors, they are driven by professional commercial investors such as pension funds and insurance companies, who are currently more than two thirds of the market. Even a proportion of private investors are actually amateur traders, who are trying to do better than the market average. The only problem is that typically, 70% of them lose.
If these tech giants fail, we have 1929 type economic crissis. But if they fail it will be because of new more important companies and technologies like AI and Quantum computing, which they already research and plan to integrate to not fail. So I would say that we are heading to a cyberpunk dystopiaish in which tech giants hold most of the value.
I have to say: bravo! Very well done. Your interviews with Ramen are also very good content.
Are those some AI generated images?
They might be!
@@DamienTalksMoney Got an Nvidia GPU?
Great idea about going out to companies giving advice about personal finances. Hope it takes off!
There is no concern, all we need is water, food and shelter.
Yeah and a portfolio of tax efficient assets that I can draw 3/4% from a year
Would love you to create a video that demonstrates how you actually live off your investments once you have saved up a healthy pot for retirement.
@@jakesharratt2442 that can be done!
@@DamienTalksMoney if you are taking requests, I'd like to hear your view on vanguards lifestrategy 100 now that vanguard have changed the way they weight it. 👍
If you are taking requests - how about a video on emerging markets - with China potentially un-investable - should investors focus on developed markets index funds like Ramin is doing ? Great videos btw Damien !
Nice plug at the end
Is there a Fund for the S&P 500 that excludes tech?
investing in anything is a risk... shock horror right
Great video as usual. I hope companies use your support. I have just started to invest and am using different platforms for different reasons. The Lifetime Investment ISA is my biggest concern. These videos are giving me more knowledge.
Concise and thought provoking wrt my investing habit. Great video thank you
If tech fails our way of life and the world around us fails. Wouldnt worry about it too much although i do love owning costco shares.
That's right and if using a passive tech fund, it doesn't matter if Apple/MS are currently dominant because such an index will be self cleansing, You are investing in the sector of technology which, as you say, if that fails, we have bigger problems in our everyday lives to worry about.
Very informative and well presented - thank you.
No I don’t think so. Not in an election year anyway, considering that the US government has got $6 trillion worth of stimulus going at the moment. however, 2025 is a different situation.
Great content as usual Damien. I've just switched from normal S&P 500 to equally weighted as I think the froth will be knocked off the top of the Mag 7. The chart over the last couple of years between these 2 investments are quite interesting and you did touch on it in this video. Perhaps needs a short video of its own?
Reminds me of a joke I heard:
My favourite TECH etf is vanguard global all cap!
That being said I invest in VHYL for a bit of diversity and yes dividends.
I tried to find an ETF that excluded the 7. Can't find one in that's available in the UK. If anyone knows give me a shout. I went all in on the SP400 last week to keep myself in the game
This was a very interesting video. And there's something reassuring about an unashamed brummie accent.
But if the Global market IS TECH, then what's wrong with that ?? It doesn't look like it's going to change anytime soon. If anything, it will get bigger and bigger.
Great video as usual Damien. I now invest in a Global Index Fund based on your videos and just discovered the Making Money pod. It would be amazing if a Shared AVC video was on radar because really interested in one of these as a work based benefit 👍
Another amazing video, each one better than the next. First class.
I only invest in the us tbh it out performs its more risky to do anything else
@damientalksmoney Could you do a video explaining how in index fund tracks the S&P500. Like over time companies move in and out of it, but your investment is tracking the index so how is it affected when there are changes in the companies that make up those 500.
Keep doing what you're doing 😊
linkage finance index funds are gonna be lit
Interesting and informative, as always! Thanks, Damien :)
Your best content yet, Damo.
Were those AI images of the farmer?
Yes mate. My editor made them
I hope you intended the pun where you described sliced bread as being at one time cutting edge tech 😅
Since the inception of the S&P 500 in 1957 on *average* it has performed over 10% year on year. Personally I don’t see that changing with the pace of innovation. I think other emerging sectors that will become big are space exploration and bio sciences as the human race moves forward.
Forgive my inexperience as I'm just about to start my investing journey (after a few months of slow research), but are the "against" points in the video really targeted at investing in small groups or individual companies? Surely if I invest in the global index, if one company takes a downturn then it's pretty likely they'll at some point be replaced with another, well performing company? Or is the key point that these "tech" (as you creatively put it) companies have such market weight that if they were to have a significant downturn, it would rattle the entire economy too hard? Ie. If the magnificent 7 all started declining, this would send ~30% of the S&P500 into decline.
Thank you sir 🫡
You are welcome
Equal weighted ETFs, rebalanced once a year.
A great and well balanced vlog. I think you would be great teaching in schools, let's get our kids financially educated, but do governments really want the masses financially educated, I don't think so.
Absolutely, the regime do not want this knowledge disseminated. The pleb class need to exist. Don't be one of them. . .
50% JGPI, 30% TDIV, 15% FGEQ, 5% FUSD gives me 15% tech stocks in my UCITS portfolio. It's very balanced
Great business idea!!! I would really like you and Martin Lewis on a weekly Money show main stream tv or on here!! And perhaps Nisha as well, dragons den sarah - that would be amazing!!
I know its the view of an investor but a company doesn’t fail just because it loses value. Eventually every company is over valued. I also feel like the % of market cap and returns factors in dividends.
These big companies will fail… for something else. The indexes are self regulating, the composition changes over time but they still capture the growth of any future winners. Short term we may see a big correction but in the long run the market will be larger. Stress less, invest more. Quoting Dory from Nemo: “Just keep swimming, just keep swimming”.
Dory is a great metaphor for passive investing. Don't need to be very smart or have a good memory, just keep swimming and you'll beat the rest of the sea life to your goal.
When I was watching this absolute masterpiece I thought I'd have questions, but now I have only one: Why on earth do you have so many remotes Damo?!
Honestly I just walked around my house once and I found all those…
@@DamienTalksMoney So none of these live permanently in a random drawer? 🤣 That's mad! Great video man, thanks a lot!
@@TheRealMerl there was defo some random draw action
The answers here must be remotely true 😂😂😂😂
Noticed an uptick in editing lately in your vids. Enjoying it mate! PS love the ABBA reference
Thank you. I've been thinking about this exact issue for a while now, and I'm glad you've explained it so eloquently!
My pleasure!
Mate. Amazing. Bang on form.
I predict with inaccuracy, the next biggest sector will be healthcare, medical devices, medical tech, biotech, pharma, health big data, health AI.
I think you could be right here around medical devices and bio tech.
Yep, I was thinking exactly the same healthcare and biotech aided by AI will boom. But that’s the beauty of an index fund.
These players are already in the mix.
Thermo and Waters provide equipment for these industries and look where they are in the S&P 😉
But which company will benefit the most? Maybe the Apple Watch series 17 will achieve what Theranos was attempting.
Healthcare is so slow though, but when it finally gets results like novo nordisk it’s huge.
You're just trying to beat the market, betting for specific sectors.
"I need to get out more" crack after throwing up a "fantastic chart?" Genius. I feel you, my friend.
Reassuring to hear. I'll keep up the passive investing because I don't have the time, energy, or knowledge to do anything else.
Would love to see you do a video about how index fund bubble pop looks like and how would it play out.
Active investors make the index funds work, if for example Apple is over invested by index funds then active investors will start selling Apple that's why u can't speak of a bubble in index funds because there's still a lot of active investors who will even it out, and there probably always will be.
Dont usually 'like' videos, but the creative advert at the end was the cherry on the cake for me. Great video!
If you like creative adverts at the end you should look up map men.
Thank you for watching all the way to the end and then taking the time to like and leave a comment. Comments like this are the exact reason I try to get a little creative sometimes
Really needed to hear this
Good thing i have only 80% on FTSE all world and i also diversify with 20% small cap value weighted, so i am less concentered.
Stocks are falling and bond yields are rising, but markets still don’t seem convinced the Federal Reserve will pursue plans to keep increasing interest rates until inflation is under control. I'm still at a crossroads deciding if to liquidate my $117k stocck portfolio, what’s the best way to take advantage of this bear market? £
Brilliant! You are bang on, there is no tech because everything is tech!
Making fire was high tech to early man.
@@george6977 James Watt utilising that fire was extremely high tech. So much so that he has a unit of measurement named after him.
Yep blame the execs puffing up valuations
Tech should be only companies that sell software (preferably exclusively Amazon).
People hear tech, they are thinking primarily Google, Amazon, Microsoft style companies.
Hardware has completely different risks, overheads, scalability, per user cost to software.
Amazon is a cloud services company with a retail business on the side. (Look at operating profits from AWS)
Side note at end.
Tesla is not a tech stock, and comparing to other car manufacturers is blatantly absurd.
I work automotive software in uk. I am definitely an ev truer believer and have spent my working life exclusively working with EVs.
The recent gloom around index’s almost convinced me just due to the high weighting of Tesla.
I would just invest in the S&P 500 come rain or shine and not worry about all the noise the S&P adjusts every year.
Me too
I'd get out of it right now if I were you.
@@annacomnena217we are at the same point in the charts now as we were when the Great Depression started. A scary and pivotal point.
@@annacomnena217 I think I will stick with Warren Buffet quote, Only when the tide goes out do you discover who has been swimming naked.
So you are avoiding any exposure to what is termed "The rest of the world".
You’re good at what you do. Well done!
Thank you very much
You are Amazing! For 50 years I was a teacher. For 40 of them at the Institute of Education, University of London. I worked in international distance learning. You and Ramin and no doubt some other genuine FinTech TH-camrs are changing this world for the better as 21st century educators. You are the pioneer teachers of this new wonderful, dynamic and dangerous century. There is one bit of knowledge that counts for more than all the others - to find out and learn and master something for oneself. But we all need people to offer a helping hand a mentor, a coach or guide. We all need to win in some way - Tommy needed Jimmy and vice versa - c.f. the climbing analogy. Keep going, your vision is a much needed one. How you get there will be a wild ride. But it will always be interesting. I wish I had another 50 years to help change this world some more.
Thank you mate!
Brilliant video. Love your well researched info! Thankyou.
As always mate. Thank you for your insights. Well done with the charts 📈
I do worry a little that the market is dominated by so few companies, but I'm not really worried that it is dominated by the tech sector. I really can't see how it would revert back to one of the previous dominant sectors any time soon. More likely it would evolve into some sector that doesn't even exist yet, which will probably still be heavily centred on tech.
I think the issue for these big tech stocks is that they will (or already have) become so big that they cannot grow at the same rate as they had before. Also that a lot of that future growth is already in the price. They might still make tremendous amounts of money going forward, but the share price might grow slower than the rest of the market.
Your end point about tech now being in everything...I do wonder if there is a paradigm shift because the source of that "tech" to power all the innovation is being dominated by a few companies, and since they have so much money it's hard to see that changing much because they can simply buy upstarts or copy and outcompete them with all their innate advantages (like Microsoft usually does). For example, there are only a handful of companies that make processors but there will be a gigantic need for more processors to power the kinds of future tech that will be incorporated widely. Same with data centers. We'll likely see the same with AI. A handful of companies will provide most/all of these, and unless they get broken up it's hard to see any way that they won't continue to be dominant.
I see the S&P 500 somewhat as a washing machine spinning round, the mix of what's in there and what's at the top at any given moment is less relevant to the growing pile of laundered clothes you have over time or wealth over the long term. (Ok, that metaphor got a bit weird 😂)
The main point is that our investments are constantly changing, so the index is changing depending on how companies are doing so even if some of these businesses will go bust, they'll be replaced, so that's fine
Diversification is a lot better in mid cap indices e.g. S and P 400, FTSE250
My concern is less with the concentration of these companies in the indices but rather their overvaluation. Large cap growth is a sucker’s bet. I wouldn’t invest in these large tech companies as “stock picks” so I don’t want them to dominate my index portfolio. I personally tilt slightly towards value factor funds (especially at historically high valuations).
VWRL for life.
@@HBS444Plus a tech fund.
Interesting video… most of my investments are in S&P 500 and global index funds.. but also I am taking a punt on Ai and next tax year on Riets also
How not to run a data analysis.😂