For the retail investor, "passive investing" (buying index funds like the S&P 500) is considered the prudent, safe strategy. However, the undeclared secret of passive investing is its role in distorting asset prices.
Historically, markets were viewed as a frontier where risk was real and bankruptcies were a necessary correction. However, since the "Greenspan Put" of the late 1980s and accelerating through the 2008 financial crisis and the COVID-19 pandemic, a new paradigm has emerged:
For the retail investor, "passive investing" (buying index funds like the S&P 500) is considered the prudent, safe strategy. However, the undeclared secret of passive investing is its role in distorting asset prices.
Historically, markets were viewed as a frontier where risk was real and bankruptcies were a necessary correction. However, since the "Greenspan Put" of the late 1980s and accelerating through the 2008 financial crisis and the COVID-19 pandemic, a new paradigm has emerged:
