Money Stuff

A thing that people used to worry about is “what if index funds get too big?” If most of the money in the stock market is not run by people who are picking stocks and evaluating companies and deciding how much they are worth, but by people who just buy all the stocks at whatever the price is, that seems like it might have weird results. “Worse than Marxism,” some Sanford C. Bernstein & Co. analysts once called it: With only passive investors, how could the market allocate capital? These days that worry has receded a bit; these days the big exchange-traded fund launches are for, like, levered single-stock ETFs or a Trumpcoin ETF, so the death of active investing seems to have been exaggerated. Still there has been a long-term trend toward indexing, and it is interesting to consider its effects on market efficiency. It is fun — difficult, but fun — to imagine a world with only index funds, one where nobody actively picked stocks and everyone just bought all the companies in proportion to

A thing that people used to worry about is “what if index funds get too big?” If most of the money in the stock market is not run by people who are picking stocks and evaluating companies and deciding how much they are worth, but by people who just buy all the stocks at whatever the price is, that seems like it might have weird results. “Worse than Marxism,” some Sanford C. Bernstein & Co. analysts once called it: With only passive investors, how could the market allocate capital? These days that worry has receded a bit; these days the big exchange-traded fund launches are for, like, levered s