Lost Debate The Market Is Speaking — Are You Listening?
Nov 19, 2025
Lawrence McDonald, author and market analyst, discusses the dangers of passive investing and its concentration in a few mega-cap stocks. He warns that traditional safety plays are being reshaped by de-dollarization and changing demand for U.S. treasuries. McDonald identifies opportunities in hard assets, select commodities, and short-term cash positions as markets face potential upheaval. They also delve into the risks of algorithm-driven trading and how generational shifts in risk tolerance are impacting investment strategies.
AI Snips
Chapters
Books
Transcript
Episode notes
Passive Investing Concentrates Risk
- Passive investing has grown so large that a few mega-cap stocks now dominate index weightings.
- That concentration turns indexes from diversified baskets into fragile bets on a handful of names.
When Passive Becomes A Perpetual Bid
- Above ~50% passive ownership, shares cluster at a few custodians, reducing free float and market liquidity.
- That creates a "perpetual bid" on the way up and an amplified, algorithmic waterfall on the way down.
Match Age With Liquidity
- Revisit portfolio allocation as retirees age; the old rule to match cash/bonds to your age still matters.
- Prepare liquidity and shorter-duration instruments before a sudden passive-driven selloff.
