[fiachamp]

I would add another factor lots of people overlook: the trend towards index investing. In the past, asset management involved actually analyzing the performance of a business, now it’s just trillions of dollars allocated merely by market cap. Index investing makes everyone QEs bitch - the end game for it is what we’re about to experience.

[quickthrowman]

How do you thinking the individual underlying shares of an equity index fund are valued? The performance of a company is analyzed, and market participants buy or sell shares and derivatives based on their analysis. You can make the argument that an over-reliance on indexing leads to less price discovery, but I don’t buy it.

The people shrieking the loudest about passive indexing are active fund managers.

[softawre]

Managed versus index is to me, open source versus closed source.

With managed funds, you have lots of participants out there eyeing the value of businesses. Everybody can make a buck by taking a peek.

With Index funds, we all have to trust that S&P is doing the right thing.

[cft]

That's exactly right: index investing is more like a mix of a pyramid scheme and central planning. It's decoupled the stock market from the underlying economic activity.