Why the index gospel was built for a world that no longer exists.
From one lie to a more respectable one.
After I shut down my quant trading operation in 2021, I did what every reformed retail trader does.
I bought the index.
For the next four years I parked money in S&P-tracking ETFs, told myself I was being responsible, and quoted "time in the market beats timing the market" at anyone who would listen.
I had moved from one lie to a more respectable one.
The gospel, in one paragraph.
The 2025 version of investing wisdom for young people goes something like this.
You can't beat the market. So buy it. Vanguard. Index. Hold for 30 years.
Compound interest is the 8th wonder of the world.
Your future self will thank you.
Every piece of that gospel assumes a world that no longer exists for anyone under 35.
The numbers nobody runs.
Let me run the math the people quoting Buffett at you never run.
The S&P 500 has returned roughly 10% nominal a year over the long run.
Call it 7% real, after inflation.
That's the historical baseline the entire "just buy the index" gospel is built on.
Now look at what an average house costs.
In Toronto, the average home in early 2026 is around $1 million.
To qualify for a mortgage on it, you need a household income between roughly $160K and $197K.
The median household income in Toronto is about $98K.
You earn half what you'd need to qualify for the average home in your own city.
The US numbers are slightly less brutal but tell the same story.
The national price-to-income ratio sits at 5x today — versus 3.2x in the 1990s and 4.1x as recently as 2019.
The average American household needs 14.4 years to save a 10% down payment.
The median age of a first-time homebuyer in the US is 38.
These are not problems compound interest solves.
Why most personal finance writers blink.
This is the part where most personal finance writers blink.
The honest version of the math is this.
Housing in Canada and the US is no longer a function of wages.
It's a function of policy.
- Decades of zoning restrictions.
- Foreign capital inflows.
- Mortgage-rate distortions.
- Boomer-protective tax codes.
Supply suppression dressed up as "neighbourhood preservation."
Cheap money for the people who already owned.
Expensive money for the people trying to buy in.
The result is a market where the asset that used to compound alongside your career now compounds at 2-3x the rate of your career.
You can't catch up by saving harder. You can't catch up by indexing harder.
The denominator is moving away from you faster than your numerator can grow.
That isn't a moral failing on your part.
That's a structural fact about the country you live in.
The 30-year assumption.
When somebody tells a 27-year-old to "just buy VOO and wait 30 years," they are quietly assuming the 27-year-old's housing situation will somehow resolve itself in the background.
It will not.
The 27-year-old will be 57 and still renting, with a respectable index portfolio and no equity in a home.
That isn't financial wisdom.
Want the full playbook? I wrote a free 350+ page book on building without VC.
Read the free book·Online, free
It's outdated information - dressed up as patience. It's not.
Buffett, in his era and ours.
This is also why young people don't want to be Warren Buffett anymore.
I used to think this was just culture rot.
Robinhood, options, meme stocks, gambling brain. All true to some extent.
But under the noise there is a real signal.
Young people have looked at the math, looked at what 7% real returns get them, looked at what their parents' generation got out of the same math.
And concluded — correctly — that the deal is no longer the same deal.
Buffett built Berkshire in an era when housing tracked wages, public companies actually returned cash to shareholders, and a 30-year compounding horizon was a reliable path to generational wealth.
None of those conditions hold anymore.
This doesn't mean Buffett was wrong.
It means his framework was right for the world he lived in, and partially wrong for the one we live in.
The bigger bet you're making.
There's also a deeper assumption baked into the 8th wonder gospel.
The assumption that the world will keep looking the way it does now.
It won't.
I've written elsewhere about why I think the next decade reshapes everything around AI, sovereignty, and what counts as a productive asset.
I won't repeat that here.
The short version. Indexing assumes the index.
The index is a snapshot of the public companies that mattered yesterday.
There is no law of nature that says the same companies will matter in 10, 20, 30 years.
If you blindly buy the index for 30 years, you are betting the table looks the same in 2056 as it does in 2026.
That's a bigger bet than most index investors realize they're making.
What I did in February.
So in February 2026, I sold the index portfolios.
Not because indexing is stupid. It isn't.
For someone with a real estate base, a long career runway, and no need to outrun a structural problem, indexing is fine.
I'm not that someone. Most young people I know aren't either.
The most useful thing you can do as a young investor right now is stop letting a framework do your thinking for you.
The index gospel was right for a world where wages tracked housing and the table didn't change.
That world is gone.
You're allowed to notice. You're allowed to act.
Part of a series on what I've unlearned about investing.