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The Importance of Passive Investing
The insight is very straightforward which is that passive is only passive if they are not receiving flows. And so in the conditions that we have today where they are continually receiving flows, they effectively become a giant active manager with completely absurd rules. So when you have that situation, the markets begin to break at much lower levels than most people have assumed. That makes me think of a quote from Charlie Munger about passive investing and he said, if you take it to its logical conclusions, you'll get preposterous results,.