From many beginners books recommended on this site (Bogleheads, Random walk down Wall Street, The Four Pillars of Investing), the argument for long-term index investing lies on the assumption that the market is efficient and the stock price characteristic is that of a random walk. What would happen then, if that wasn't the case anymore, as in many frontier markets? Does long-term investment in stock still makes sense? Is index ETF still a good choice when the extra TER in active funds eats up the larger return? Or it's better to find less volatile forms of investment? How can it be that the large cap index is weakly efficient and shows signs of random walk, while the rest of the market isn't?
For context, in Vietnam - a frontier market, saving interest has for the first time dip below the average index return of the last decade and current corporate bond rate. The stock market trading volume has doubled in less than 2 years, with a huge influx of new, inexperienced investors and is on the second largest rally in the mere 20 years of its existence.
Submitted August 31, 2021 at 12:55AM by Zannierer https://ift.tt/3DuWx4p
