Why Passive Investors Lose | Contrarian Investor Michael Green

Bankless

[email protected]

Tech News, News, Technology

4.8 • 1.1K Ratings

🗓️ 18 August 2025

⏱️ 95 minutes

🔗️ Recording | iTunes | RSS

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Summary

Contrarian strategist Michael Green lays out why “passive” isn’t passive at all—it’s a flow-driven algorithm, turbocharged by policy, that funnels capital into mega-caps, starves small caps, and raises the odds of market non-clearing shocks. We unpack Sharpe’s arithmetic vs. rebalancing reality, lessons from Volmageddon, the aging of investor cohorts, why stress may be deflationary before inflationary, and how to “doom-proof” a portfolio with assets that throw off cash (including overlooked duration/TIPS and munis). Michael also separates crypto’s burn-it-down narrative from its true promise: tokenized, programmable securities that fix TradFi’s paper plumbing. ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ------ TIMESTAMPS 0:00 Intro 4:52 Finance Twitter vs Crypto Twitter 6:42 Fundamentals vs Narrative 9:53 Passive Index Investing 22:12 Message for Passive Investors 28:43 Market Cap vs FDV 30:23 Large Cap Dominance 40:45 Other Distortions 43:40 Volmageddon 50:14 Demographics 55:17 Passive Doom-Proof Portfolio 1:04:15 Currency Collapse 1:09:51 Gold & Precious Metals 1:15:58 Bitcoin vs Gold 1:18:29 Ray Dalio Debt Cycles 1:22:43 Stablecoins & Tokenization 1:28:53 Message to the Listeners 1:34:32 Action Items 1:35:28 Closing & Disclaimers ------ RESOURCES Michael Green https://x.com/profplum99 Michael’s Substack https://www.yesigiveafig.com/subscribe?coupon=879f4ac8 ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

Transcript

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0:00.0	If money in a Bitcoin framework gets too expensive, there is no mechanism for adjustment.
0:06.9	And so ironically, Bitcoin is actually anti-human ingenuity.
0:11.5	Hmm.
0:12.0	In a scenario in which the price of money is going up, it cuts off access to many forms of capital, especially debt.
0:22.5	Welcome to Bankless. This is Ryan Sean Adams. It's just me today. So I'm here to help
0:27.6	you become more bankless. Michael Green thinks the dominance of passive investing has made an
0:33.2	absolute mess, a catastrophe out of our existing financial system. And someday, he thinks it's
0:39.3	going to bite us in the ass. We're going to pay a very high price for blindly following the crowd.
0:44.9	This was a fascinating idea. And very much like crypto, it's certainly not the mainstream take,
0:50.1	which is exactly why I found it so interesting. A few things we discuss. The problem with index
0:55.1	funds. Why passive investors lose. Volmageddens and mega firms. Fundamentals versus narrative,
1:01.8	which one's more important? Why he doesn't like Bitcoin, but likes tokenization and smart
1:06.9	contracts. And I thought, most curiously, his case for long duration bonds. I found that
1:13.8	I agreed probably with about 50% of what Michael had to say, and the other 50% I found myself
1:19.5	thinking about it in the very least, and that to me is the mark of a successful episode.
1:24.9	So let's get into why passive investors lose with Michael Green. But before we do, I want to thank the sponsors that made this episode. So let's get into why passive investors lose with Michael Green. But before we do,
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	...

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