Passive investment free-rides upon and dilutes the returns to passive investment. All differences in relative price are set by active investors, but those who are correct enjoy much lower excess return than they would in a world where billions of dollars of flow didn’t match their moves. 1/

You start with an assumption American capitalism flatters itself that is simply wrong, that if a thing is valuable it must earn higher returns. Passive investment simultaneously shirks the information work of investment while dramatically lowering returns to those who actually engage in it. 2/

That’s not the worst of it. There are more actively destructive aspects of widespread indexing. I may be mistaken, but you are unlikely to surprise me with a counter argument, this is an argument I’ve been making for almost 20 years. Mistaken or not, it’s a considered view. /fin