Why The Rise of Passive Investing Might Be Distorting The Market
Odd Lots
Bloomberg
4.5 • 2K Ratings
🗓️ 10 February 2020
⏱️ 47 minutes
🧾️ Download transcript
Summary
Over the last decade or so, we've seen an incredible rise in so-called passive investing. While definitions differ over what this means, we've seen more and more money poured into index funds (which own every stock in a given basket). Meanwhile, money has been yanked away from money managers who attempt to select individual stocks. One school of thought argues that this is a positive, in part due to lower fees. But is there a dark side? On this week's episode, we speak to Mike Green of hedge fund Logica Capital, who argues that the trend is causing major market distortions that will eventually unwind with ugly consequences.
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| 0:00.0 | Join us in New York on November 29th for the Bloomberg Canadian Finance Conference, |
| 0:04.6 | proudly sponsored by National Bank of Canada Financial Markets. |
| 0:07.8 | 2023 marks the 11 year anniversary of our Canada focused event and continues the tradition of providing timely |
| 0:13.8 | insights and actionable strategies. We'll have senior government |
| 0:17.1 | officials from Saskatchewan, Quebec, British Columbia, Alberta and Ontario as well |
| 0:21.9 | as speakers from Northland Power, World Bank, Transolta, and many more. |
| 0:26.0 | Register at Bloomberg Live.com slash Canadian Finance slash radio. Hello and welcome to another episode of the Odd Lots Podcast, I'm Joe Wiesenthal. |
| 0:45.0 | I'm Tracy Allaway. |
| 0:46.0 | And I'm Joe Wisenthal. |
| 0:48.0 | So Joe, I tweeted something recently and it provoked a large response on social media. |
| 0:55.0 | It's weird how that happens, right? |
| 0:57.3 | You tweeted something that provoked a response? |
| 0:59.6 | I find it very hard to believe. |
| 1:01.9 | I know, it's outrageous. but I was talking about have you heard of the fire movement |
| 1:09.2 | Yes, vaguely like I am familiar with it. It has to do with people retiring early, right? |
| 1:16.5 | Yeah, so it's fire as an F I R E and it stands for financial independence retire early and the basic idea is you can save a lot of money and if you invest it wisely you can retire at an early age like in your 30s and supposedly it's it can |
| 1:37.1 | work out for even normal people or people on normal salaries we're not talking about |
| 1:41.9 | really wealthy people and the thing that I always find really interesting about it is when you go and read about how people are actually investing that money so that they can retire early, |
| 1:53.8 | they're almost all talking about doing it, |
| 1:56.6 | A, themselves, and B, through passive investments like ETS. |
| 2:02.3 | Right, exactly right. |
| 2:04.0 | So people think, okay, they live frugally, they work for several years, they live frugally, |
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