The End of Ten Years Growth of U.S. Stock Market

Whether the ten years growth of U.S. stock market will end is not an issue, when will the trend reverse begin is an issue.
The trigger of the reverse process of U.S. stock market is very likely to be the large scale net outflow of passive index funds. The dropping of major market index such as SP500 would create panic among passive fund investors, pushing them to redeem their shares, which would start a self-reinforencing process of price fall in the general market.

The Russel 3000 index market cap is USD 30 trillion by Jan 18, 2018. (
The Russel 3000 index is 1,575.36 by Jan 18, 2018. It is 1755.31 by Sep 20, 2019.
The Russel 3000 index market cap as of Sep 20, 2019 is 33.4 trillion. The total market cap of U.S. public traded equity is about 34.1 trillion.

U.S. passive equity fund, $4.271 trillion. U.S. active equity fund, $4.246 trillion.

The U.S passive equity fund accounts for about 12.5% of U.S. market cap.

U.S. market structure
U.S. institutional investor share percentage

Market Participants

  1. Active Mutual Funds
  2. Passive Mutual Funds
  3. Pension Funds
  4. Insurance Companies
  5. Hedge Funds
  6. Managed Accounts
  7. Investment Companies
  8. Individual Investors (Shareholders)

Systematic Risk Brought By ETF

The Bigest Trend of the Ten Years Peroid

The bigest trend in 10 year in global economy is that the abnormal montary policy as well as the low/negative risk-free interest rate in Europe and U.S. has become the new norm. Europe central bank and Federal Reserve retart QE to provide liquidity. The abnormal monetary policy of structurally low interest rates is the new normal. Savings are punished and borrowings are encouraged. The authority in Europe and U.S. are execively relying on monetary policy to support economy growth. Interest rate is brought down to below zero in Europe and Japan, which changes the fundamentals in both the financial system and modern economy as the principle of time value of money is breached.

Real Estate Sector

Green Street Commercial Property Price Index
S&P/Case-Shiller U.S. National Home Price Index
Commercial Real Estate Prices for United States



Bull Market Trigger

  1. Inflation meet 2% target, federal reserve starting tighting monetary policy
  2. Credit event

Banking Industry Deregulation

  1. "Volker Rule" is introduced in 2011 to prevent the situation when the central bank has to bailout failing banking institutions as they fail in financial crisis, by forbidding banking institutions from engaging in propritary trading of financial securities, thus lowering the overall industrial risk.
  2. The deregulation of banking industry, by revoking or weakening "Volker Rule", will allow commerial banks to pursue a higher return of asset by participate in prop trading. Commerial bank prop trading will introduce depositary fund into the financial market, which will raise the overall asset price.