We at T&T Capital Management have been making the argument that the marketing and shift towards index fund investing, irrespective of valuation, is likely to lead to very serious problems in the future.  Every bubble arises out of a good story that gets carried too far.  Once valuations are seen as virtually irrelevant info, that is usually a pretty good tell that there are problems coming.

I came across this article from investor Michael Burry, who was the real person behind Christian Bale’s character in the Big Short, and it seems that he has a similar take.  The key takeaway is that there are tremendous values available, but you must be very discerning at what you buy.  Following the herd at this point in the cycle is what we want to avoid, although predicting the timing of when we see mean reversion, is extremely difficult.  I hope that you enjoy the article below: