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How much passive investing is too much?
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
Robin Powell
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Why expected returns matter more than index concentration
The fund industry says index concentration is the big risk. But the evidence points elsewhere. Compressed expected returns are what really threaten your long-term wealth — and the right response is simpler and cheaper than the industry would have you believe.
Robin Powell
Feb 279 min read
Index concentration: why the Mag7 'problem' strengthens the case for indexing
The S&P 500's concentration in the Magnificent Seven has critics worried about indexing risk. But Hendrik Bessembinder's research reveals why index concentration actually strengthens the case for passive investing: just 4% of stocks drive all market returns, and active managers consistently miss these winners. Historical data shows market concentration has been normal for 150 years, from railroads to tech giants.
Robin Powell
Sep 9, 20258 min read
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