Full Signal The 'everything bubble' poses a bigger risk than AI, $11 billion strategist says
Nov 5, 2025
Mike Green, chief strategist at Simplify Asset Management, dives into today's market risks, focusing on the 'everything bubble' driven by passive investing. He explains how this trend inflates asset prices beyond their fair value and draws parallels between the current AI boom and the dot-com bubble. Green also critiques Bitcoin as a failed payment system and discusses how 401(k) designs have intensified passive investments. With insights on market structure and hidden economic weaknesses, it's a thought-provoking conversation for any investor.
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Passive Flows Inflate Asset Prices
- Passive, market-cap-weighted funds act like systematic algorithmic buyers and push prices up indiscriminately.
- That flow-driven buying can inflate valuations above fair value and distort price discovery.
Eroding Market Elasticity Raises Crash Risk
- As passive share grows, fewer investors remain to counter runaway price moves and shorts have largely disappeared.
- That reduction in natural sellers/buyers raises the chance of a tipping point where liquidity fails and prices gap down.
Model Flow Multipliers, Not Just Spreads
- Recognize that dollar inflows have outsized market-cap effects compared with classic EMH assumptions.
- Adjust position sizing and risk models to account for a $1 inflow creating multiple dollars of market cap.
