Warnings that index funds have broken the stock market all imply a threshold: a share of the market at which price discovery fails. Nobody making the argument names it. Owen Lamont, writing in the Financial Analysts Journal, argues that no such number exists short of complete passive ownership, and that what actually determines whether prices stay informative is who is left doing the trading. His case, the strongest peer-reviewed research against it, and what the performance
New research covering 100 years of US stock market data shows that just 46 firms out of nearly 30,000 drove half of all shareholder wealth creation — down from 89 in the original study. With wealth increasingly concentrated in fewer winners, the case for indexing has never been stronger. Here's what the numbers mean for your portfolio.
Robin Powell
Mar 208 min read
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