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Michael Green: Evolving Market Structures and COVID-19 (EP.05)

Infinite Loops

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Is There an Inflationary Aspect Associating With Passive Investing?

There's an inflationary aspect associated with passive investing, and this is one of the areas that's not iwould argue, it's not widely discussed or understood. Passive vehicles don't care at all about valuation or forward expected returns. They are presumed to actually be imbedded in the existing security prices. The second characteristic is is that they abhor cash. And so they tend to carry zero cash, or very close to zero cash.

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