Passive investing and index funds have changed the stock market. But if more money simply tracks the market, who is left to set prices?
In this video, we break down the hidden tension behind passive investing: Sharpe’s arithmetic, active manager underperformance, SPIVA evidence, the Grossman-Stiglitz problem, rising passive share, index flows, market concentration, and the open question of price discovery.
Passive investing may be rational for individual investors. But if it becomes dominant, the market still needs informed active investors to decide what securities are actually worth.
This is not a prediction. It is a framework for understanding how index funds, ETFs, active management, and market structure interact.
-----
#PassiveInvesting #IndexFunds #ETFInvesting #StockMarket #PriceDiscovery #MarketStructure #Investing #Finance #Quantly #ActiveManagement #SPIVA #IndexInvesting #MarketEfficiency #QuantFinance