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US Stocks Too Richly Valued For Their Risk | John Pease, GMO

Thoughtful Money with Adam Taggart

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The Impact of Passive Investing

This chapter investigates the influence of passive investing on mega-cap stocks, focusing on the Magnificent Seven and their earnings growth compared to the average S&P company. It contrasts the dynamics between passive and active strategies, addressing how limited selling impacts valuations and the performance of smaller stocks. The discussion concludes with insights on how market distortions from passive investing create both challenges and opportunities for active investors.

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