How To Escape Michael Burry's Passive Bubble Armageddon? Buy VFLQ

About: Vanguard Wellington Fund - Vanguard U.S. Liquidity Factor ETF (VFLQ)
by: The Belgian Dentist
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The Belgian Dentist
Portfolio strategy, value, REITs, dividend investing

Michael Burry claims that the passive investing boom has led to a “passive bubble” that will end in tears due to a lack of liquidity.

On the other hand, might it be too soon to sell our equity holdings now given the liquidity provided by central banks and the ongoing economic growth?

It might be a good idea to look for stocks that are not part of mega-passive ETFs and offer a so-called illiquidity premium.

In 2003, Warren Buffett called derivatives weapons of mass destruction. Borrowing Buffett’s terminology, Arik Ahitov and Dennis Bryan, FPA Capital fund managers, call ETFs “weapons of mass destruction” that have distorted stock prices and created