#084 Michael Green On Passive Investing Creating Distortions In The Market Right Now
The Julia La Roche Show
00:00
The Negative Narrative of the Fed
The general narrative is that passive vehicles simply mimic the behavior of active players in aggregate. That's increasingly untrue as you have this reinforcing loop of the most money being allocated to the largest stocks and their liquidity not scaling in proportion. The more passive vehicles grow, the more these behaviors become self-reinforcing because somebody has to carry the cash to allow markets to function in a liquid fashion. Right now, we're seeing the opposite. We're seeing active managers try to reduce their cash. It's creating conditions that power the market higher in and of itself.
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