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The index mindset - by John Luttig - luttig's learnings

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Through the 1980s, gut-driven active fund managers on Wall Street dominated money management and ridiculed index funds as “a sure path to mediocrity”. Sure, index funds’ fees were 80-90% lower than those of active managers, but aiming for average is un-American. Yet as active managers underperformed the index 80% of the time in the coming decades, the argument favoring passive funds became a no-brainer: why pay higher fees for worse performance? Even Warren Buffett, famous for his concentrated portfolio, now tells us to simply invest in index funds. Correspondingly, public index funds have doubled their market share in the last decade – a multi-trillion dollar transition from active to passive assets. This pro-index tendency pervades the private tech markets, startups, and even our culture through what I call the index mindset: a focus on preservation over creation, optionality over decisiveness, general over specific. Public companies are an obvious thing to index, but the index minds

The index mindset Index funds have come to dominate public markets. But the shift towards indexing is spreading across tech, careers, and culture too – in what I call the index mindset. John Luttig Sep 15, 2021 100 10 6 Share Through the 1980s, gut-driven active fund managers on Wall Street dominated money management and ridiculed index funds as “a sure path to mediocrity” . Sure, index funds’ fees were 80-90% lower than those of active managers, but aiming for average is un-American . Yet as active managers underperformed the index 80% of the time in the coming decades, the argument favoring

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