> The growth of passive investing, through index funds found in the 401(k) accounts of average Americans, has propped up the stock market
Article could do with a lot more rigor and maybe trying to say something novel.
Title says “fueled “, which is categorically different from their first paragraph where they already concede ground by saying “propped up”.
Which is it? Fuel a bull market or prop up the market? Or something else?
The consensus view is passive flows create some valuation distortion at the margin, concentrated in mega-caps and net inclusions/exclusions.
However, “props up the market” as a whole-market thesis (i.e., prices would collapse without new passive inflows) isn’t well-supported empirically.
andsoitis•24m ago
> The growth of passive investing, through index funds found in the 401(k) accounts of average Americans, has propped up the stock market
Article could do with a lot more rigor and maybe trying to say something novel.
Title says “fueled “, which is categorically different from their first paragraph where they already concede ground by saying “propped up”.
Which is it? Fuel a bull market or prop up the market? Or something else?
The consensus view is passive flows create some valuation distortion at the margin, concentrated in mega-caps and net inclusions/exclusions.
However, “props up the market” as a whole-market thesis (i.e., prices would collapse without new passive inflows) isn’t well-supported empirically.