The Problem with Passive: Part II

Published on
December 16th, 2019
8 minutes

The Problem with Passive: Part II

The One Thing ·
Featuring Drew Bessette

Published on: December 16th, 2019 • Duration: 8 minutes

What happens to financial markets when passive strategies become the norm? This week, Drew breaks down the conversation between Mike Green and Raoul Pal to understand how massive that passive strategies are.



  • AE
    Abou E.
    22 December 2019 @ 17:08
    The music in the background is really really annoying...
    • JL
      J L.
      23 December 2019 @ 14:59
      very necessary yeah
  • DW
    Dean W.
    22 December 2019 @ 01:04
    These guys are all a lot smarter than, but how can “more than 100% of the money coming into the Market” be going into passive investments? Is that like when I give 110% effort at work? :D
    • DS
      David S.
      23 December 2019 @ 00:54
      My interpretation is: The passively managed funds going into the market are greater than the actively managed funds coming out of the market. If this continues the market as a whole will increase from the current 35% to approach Mr. Green's critical point of 50% over time. DLS
  • ZL
    Zach L.
    17 December 2019 @ 00:34
    That was a useful summary. I didn't understand the full interview.
  • RS
    Randall S.
    17 December 2019 @ 00:24
    Seriously, where's AK?
  • DS
    David S.
    16 December 2019 @ 18:28
    Well done. Since I am not a polymath, I look the effects of 90% indexing simply as a flow of funds reflecting fear and greed. The world is awash with investable dollars from all the QEs, low interest rate borrowing, etc. Baby boomer are pouring in money to top off retirement account. This is the greed side which raises all boats. A perceived black swan will flip the toggle switch to fear. Everyone will try to sell the indexes all at once and prices will plummet along with Aunt Mary's pension. The government will buy massive amounts of stocks (MMT) to rescue Aunt Mary's pension. Counterparty risk will exacerbate the problem. Of course, I have thought we were trouble for a long time. I have been wrong so far. Happy Holidays. DLS
  • TR
    Thomas R.
    16 December 2019 @ 16:41
    Where's AK?