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
The fund industry warns that S&P 500 concentration makes your index fund dangerous. A major new study covering nearly a century of data tells a very different story — and suggests the real risk is listening to people who profit from your fear.
Robin Powell
Feb 189 min read
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