Bankless Why Passive Investors Lose | Contrarian Investor Michael Green
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Aug 18, 2025 
Join Michael Green, Chief Strategist at Simplify Asset Management and seasoned market contrarian, as he dismantles the myth of passive investing. He discusses how passive strategies skew market dynamics, favoring mega-caps while sidelining smaller firms. Green dives into lessons from Volmageddon and stresses the importance of a resilient, cash-flowing portfolio. The conversation also explores the true potential of crypto beyond its destructive narrative, highlighting the innovative promise of tokenized securities that could transform traditional finance.
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Passive Is An Active Flow Algorithm
- 'Passive' funds aren't truly passive because they must trade on inflows and rebalances.
- That flow-driven algorithm changes market behavior as passive gains share.
Flows Break Historical Mean Reversion
- Large-scale passive flows mute value-based mean reversion and push valuations higher.
- When passive dominates, price discovery weakens and crashes become more likely.
Volmageddon As A Warning
- Michael relates his trade around the XIV Volmageddon event as a warning sign.
- He used that collapse to illustrate how systematic selling can overwhelm liquidity.
