Know Your Risk Podcast Implications of Passive Investing
Dec 19, 2025
Zach and Chase delve into the intriguing world of passive investing and its surprising impact on market valuations. They uncover how recent market rallies are driven by passive flows and discuss uncommon value opportunities amidst distortions. On a global scale, they explore the intricate economic ties between the US and China, emphasizing mutual dependencies in trade and technology. The conversation also shifts to football, critiquing game strategies, player instincts, and coaching decisions, making for a lively mix of finance and sports insights.
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Passive Flows Created Market Distortions
- Passive-driven flows have hot-wired markets, creating non-permanent distortions in price behavior.
- That anomaly produced once-in-a-career value opportunities as out-of-favor assets were disproportionately beaten down.
Use Stops And Expect To Miss Early Moves
- Adhere to disciplined stops and accept missing initial moves when buying catalysts.
- Use risk controls because catalysts sometimes fail or don't materialize.
Big Drawdowns Create Hidden Value
- Many international and commodity names were left for dead, creating deep value after big drawdowns.
- Beating prices down enough turns assets attractive despite good fundamentals.