Came across this article in the New York Times this morning and thought it was interesting.
Some points from the article:
"This week, as markets shuddered, exchange-traded index funds were responsible for 38 percent of total stock trading on some days, an astonishing figure given that these funds were just a curiosity 10 years ago.
"As the flows have grown in volume, much of these funds have gone toward index heavyweights like Amazon, Apple and Facebook, pushing their valuations ever higher. This makes some regulators, academics and investors nervous. What happens, they ask, when passive investors own 80 percent of stocks as opposed to the 40 percent they control today?"
"Active fund managers — human stock pickers — will be marginalized, the argument goes. And that could cause harm, because they are the ones who buy when others sell. So when stocks suddenly plummet, there will be fewer funds to step in, extending the fall."
I know that the folks of /r/investing are advocates of passive investing (I am one of them), so I'm interested in hearing your thoughts.
Submitted February 10, 2018 at 10:15AM by bryan2048 http://ift.tt/2nRMMrQ
