The Impact of Passive Investing on Market Dynamics

This chapter examines the effects of passive investing on market structure, focusing on examples like Tesla and Bitcoin to illustrate changing capital flows. It discusses innovative strategies such as direct indexing and their advantages in tax efficiency, and highlights the mathematical implications of passive strategies on market volatility. Through exploring the challenges faced by active managers and systemic risks in the financial landscape, the chapter sheds light on the evolving nature of investment approaches and their broader implications.