> What else would you propose and that would act both as a motivation and as a limitation without resorting to micromanagement? I touched on the big relevant o

> What else would you propose and that would act both as a motivation and as a limitation without resorting to micromanagement? I touched on the big relevant one right now: moral hazard of bailing out companies when they should naturally fail and get pruned away so that healthier competitors can buy their assets and take their customers. We just need to take our hands off the wheel for a second, because we're steering hard to one direction. If you knew that some airlines would fail and others would succeed, you'd try to pick winners instead of just buying some airline ETF. There are technical issues that need to be resolved because they damage price discovery. Short selling, locate requirements, failure to deliver...GME showed us that all of these technical functions of the market are broken and lose consistency when taken to the extreme. Little technical issues can have large qualitative consequences. Margin is another example. Archegos was a red flag. Point being, instead of worrying about market positioning and participant motivation, we have plenty to fix with broken regulations, easy monetary policies, and excessive corporate welfare. To loop back to index funds...Any strategy in a high-lift bull market is going to be beaten by "buy and hold." The article suggests that correlation is a result of passive investment, but in actual fact the causality is reversed; passive investment is driven by people who watch the correlation and decide that stocks only go up. There's no reason to trade tactically or selectively in a one-way environment. If you fix the environment, you presumably change the behaviors, with no need to think about carrots and sticks.