Author name: jw

Ponzi Funds Paper by van der Beck, Bouchaud, and Villamaina Has a Dire Message for Index Funds Events are moving rapidly. The current state of understanding regarding index funds’ effects on stock prices, valuations, and trading activity is accelerating. When we created Passive Parabellum last year to monitor the effects of indexing on capital markets, […]

We discussed Princeton academic Burton Malkiel’s continued cheerleading for passive investing here at Passive Parabellum, despite the mountain of evidence, academic and in practice, that indexing is destroying market efficiency and price discovery. Recently, the esteemed professor wrote in an op-ed in the Wall Street Journal that the FDIC’s rules against concentrated ownership in bank

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

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

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

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,

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

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,

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

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