Author name: jw

Prominent hedge fund manager David Einhorn of Greenlight Capital exposes how index funds have broken the stock market and impaired price discovery.

David Einhorn Exposes the Major Problems With Passive Index Funds

Greenlight Capital founder and prominent value investor David Einhorn cogently exposes the flaws inherent in index investing in his latest quarterly letter to shareholders. At the heart of the problems with passive investing is the simple algorithm that governs how funds are allocated. If the end investor gives cash to an index fund, that fund […]

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In a recent interview with Bloomberg, Greenlight Capital founder David Einhorn explains how passive investing broke the stock market.

Investing Legend David Einhorn: Passive Investing Broke the Stock Market

David Einhorn, founder and portfolio manager of Greenlight Capital, is well-known for speaking out on major issues affecting the financial markets. He called out Lehman Brothers questionable accounting practices in 2008 and wrote a book on the shenanigans at Allied Capital. In a recent interview with Bloomberg, Einhorn detailed how the mass adoption of passive

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Mike Green, the man who has done more to educate the investing community about the major flaws in passive investing, educates Barry Ritholtz on the fragility of the indexing craze.

Mike Green Educates Barry Ritholtz on the Major Flaws in Passive Investing

The man who has done more to expose the nonsensical foundations of passive investing, Mike Green, is at it again. The portfolio manager at Simplify Asset Management and former investment advisor to Silicon Valley tycoon Peter Thiel recently responded to pushback on his passive investing thesis from Barry Ritholtz. For the uninitiated, Ritholtz is Chairman

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Investors have increasingly taken hardship withdrawals from their 401(k) accounts at indexing giant Vanguard, putting pressure on passive flows.

Emergency Vanguard 401(k) Hardship Withdrawals Hit a Record High in 2023

Vanguard 401(k) Hardship Withdrawals Increase to 3.6% of Client Base in 2023 Signs of economic distress are building, even though the initial jobless claims report released by the U.S. Department of Labor still shows that layoffs are subdued. However, there is significant debate over whether this data accurately captures the state of the labor market,

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The thought leaders of investment management industry are starting to admit major flaws in the passive investing model, even though they do not understand the full extent of the problem.

Bloomberg Starts to See The Major Flaws in Passive Investing

John Authers of Bloomberg Admits Major Flaws in the Passive Investing Model John Authers, senior editor for markets at Bloomberg and a Bloomberg Opinion columnist wrote recently that there is a “strong case” that indexing is distorting market prices. This is refreshing even if it is long overdue. The mainstream financial press and industry titans

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Passive Ponzi: A Dollar Into Index Funds Creates $17 of Market Value Magically Out of Thin Air

The Passive Ponzi: We have continually highlighted the work of Xavier Gabaix (Harvard University) and Ralph S. J. Koijen (University of Chicago, Booth School of Business) here on Passive Parabellum. Their ground-breaking 2021 paper, In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis, illustrated the inflationary [as in artificially higher stock prices,

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Analyzing Securities Is Becoming Futile in the Era of Passive Investing

CFA Enrollment Plummeting as Analyzing Securities is Becoming Futile

The CFA or Chartered Financial Analyst designation has long been the gold standard for professionals in the investment industry. To earn the CFA credential, candidates must complete a three-level program covering topics such as ethical and professional standards, investment tools, financial statement analysis, and portfolio management. Individuals also must have relevant securities industry experience to

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Passive ETFs Distorting the Stock Market

New Academic Paper Adds to Evidence that Passive ETFs are Distorting the Stock Market

Continuing our recent coverage of passive ETFs distorting the stock market, a new academic paper by three German researchers convincingly argues that an increase in passive ownership is having a dramatic effect on the functioning of the stock market. Since cash flowing into ETFs (exchange-traded funds) causes indiscriminate buying in the underlying names represented by

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401(k) hardship withdrawals are rising as Americans are under financial stress

401(k) Hardship Withdrawals Rising As Americans are Under Stress

The New York Post recently reported that Americans are raiding their retirement accounts to cope with inflation. Fidelity Investments said that 2.3% of workers withdrew money from their 401(k) or IRAs in the last quarter. This number increased from 1.8% of those surveyed in the same period in 2022. The IRS hits savers hard for

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