Found this article from «the market» today in my feed
‘Is the Passive Investing Bubble Bound to Burst?’
German:
English:
I’d love to hear your opinions on this.
My first thought was that passive investors are not bringing «the market» or the NZZ in general a lot of money so shying people into active investing will also help them selling their product.
1 Like
“What is she selling” is always the main question.
Sounds like, despite the provocative title, the critic is more aimed toward the S&P500 not being representative of the market as a whole than toward passive investing being toast. What I take out of it is to invest in total indexes, including all investable markets and small caps.
All in all, it reads like a poorly written article stating the same thing repeatedly, feeding on fear. I wouldn’t put any stock behind it.
1 Like
I think passive investing is here to stay.
2 Likes
Stumbled upon the article this morning and found its argumentation pretty weird. The title is about passive investing, but the article then mainly talks about the concentration of the S&P 500, which are completely different topics. You can also invest passively in a less concentrated index / basket, although it is of course not clear that this will lead to better results. I think there is anyways no such thing as “completely passive” investing. The choice of the index is still an active decision that may influence the results significantly (for instance over- / underperformance of the US).
Also found it very weird that she drew a causal connection from the inclusion of Tesla in the S&P 500 and its steep increase in value. I think I saw a paper once that analyzed this in detail and found no under- or overperformance for stocks that get included in major indices. This makes sense to me, as if there were a systematic under- or overperformance, the large players would notice this and act accordingly, therefore eliminating any differences.
2 Likes
Betteridge’s law of headlines is still valid.
4 Likes