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No? > Are Index Funds Communist? > But when those thoughtful active analysts are replaced with passive index funds, the market stops serving that function. >
by ucaetano 8y ago
No?
> Are Index Funds Communist?
> But when those thoughtful active analysts are replaced with passive index funds, the market stops serving that function.
> Indexing is cheaper, yes, but that's because active management has positive externalities, and if no one will pay for it, those benefits will disappear.
> But more fundamentally, there is an alternative view that the rise of passive investing will improve capital allocation
> The passive investors can't influence relative prices
> Their worry is that the growth in passive and quasi-passive products
> Or I guess pure indexing -- everyone passively throws money at everything that there is, with no judgment at all -- is an imaginable fourth answer, and is strictly worse than the others.
- tanderson92 8y agoThis is a very poor way to think about what the central thesis of an article is.
- ucaetano 8y agoYeah, I guess that when the title, subtitle, and half of the entire article are about index funds, the article isn't about index funds.
- tanderson92 8y agoIt's definitely possible, as evidenced by this case where the article is actually not about index funds! Also passive and quasi-passive is in no way necessarily "index funds"