Anyone who has read the talks 6 and 7 and especially the talk 7 revisited part.
If I follow Munger and interpret correctly, he is saying that :
For SP500 at a high PE say 40, the earnings yield is 2.5%.
lets say the aggregate fund management cost (incl. brokerage) is 1.5%-2% of the market cap - that means the entire more than 50% and up to roughly 80% of the earnings of the entire SP500 earnings can go to the houses and brokerages.
This leaves the passive investors of high cost funds with a much smaller portion of the earnings, and they are at a large disadvantage at high PE times in comparison to a low cost ETF charging at 0.4% or less.
Such a high cost fund works like a Ponzi-scheme, because the earnings mostly go to the brokerages/houses and the holder has to solely rely on the next buyer to pay a higher price at higher PE.
That also means an ETF at 100 PE, even if the cost is 0.4%, is at an inherent disadvantage, if there are any.
Is Munger saying in his own way that even passive investing diminishes potential future returns, when invested at a high PE?
Is this the right way to interpret that Febezzlement or am I missing something somewhere ? If math ain't mathing, feel free to correct me.