Rule #1 Finance Blog

With Investor Phil Town

InvestED: Ep. 233- Michael Burry & Index Investing Fears

“Take responsibility for your future and start learning.” – Phil Town

This week Phil and Danielle continue their conversation on famous investor, Michael Burry and his opinion on index funds. In this episode of InvestED, they dig deeper as to why there could very well be a larger problem on the rise in the US market.

As a Rule #1 investor, you don’t want to gamble. Investing this way is simple if you follow the 4 things Warren Buffett and Charlie Munger said to do:

  1. Understand the business
  2. Confirm that the business has a competitive advantage
  3. Make sure that management is great
  4. Buy the company on sale

By following the example of the best investors in the world, it’s possible to make amazingly high returns and do it with much lower risk and lower volatility than the average stock in the stock market, although such investment success is presumably impossible by modern portfolio theory.

Over 10 years ago, Burry made an excellent decision to bet against the entire housing market in the US when he saw problems with the subprime bond market for real estate. Now, Burry believes that the same principles that led to the crash in 2007 exist once more.

Passive investments account for over 40% of the market right now. Many people are investing in these accounts without knowing the REAL value of what they are buying, which makes the amount of money in these passive investments dangerous.

Just like snowfall, it’s not a big deal until it gets to be a lot of snow. It’s the weight of it all building up that could create an avalanche.

But what should you do about it?

If you want to learn how to invest like some of the best investors in the world and how to protect yourself from another crash, join us on the podcast today!

Show Notes:

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On the InvestED podcast, Phil and his daughter Danielle shine a light on the successful investing strategies that gurus like Warren Buffett have used for 80 years. Listen in for a great stock market education on basics, learn how to invest on your own, and follow along with real-time examples and investing tips from week to week.