Passive investing is a fairly new phenomenon and we don’t actually know if it works long term. The premise of the stock market is that it’s a market. Blind and wide investment goes against the principles of how investment works. We could be accelerating bad outcomes because we are basically rewarding and punishing companies based purely on momentum, not performance.

Basically, I think it’s possible that passive investment only works when it’s a small slice of total investment. Essentially, then you ride off the expertise and decisions of others.

What happens when it’s the majority of investment? We don’t know.