Inigo Fraser Jenkins once warned that passive investing was worse for society than Marxism. Now he says even that provocative framing may prove too generous https://t.co/7ymvZM01TX ...

The inconvenient truth of passive investing is that it's too big to proxy, says @johnauthers. But the alternative is divide and rule (via @opinion) https://t.co/YjZ1LHuhz9 ...

John Bogle had a great idea that lowered the cost and democratized investing, but in this extraordinary time of technologically-enabled, transformative innovation, passive “investors” should not be “voting” when they know not what they do. I believe that even Bogle would agree that the pendulum to passive has gone way too far! ...

Core Insights - The Inelastic Market Hypothesis (IMH) suggests that for every $1 of capital flows, the market's aggregate value changes by approximately $5, indicating significant market volatility compared to underlying fundamentals [2][3] - The Federal Reserve's quantitative easing (QE) and the rise of passive investing have created inelastic demand in the market, distorting price signals and leading to misallocated capital [5][8] - The current market environment is characterized by a high level of kinetic energy due to concentrated capital flows into U.S. indexes, which poses risks of sudden market corrections [11][13] Market Dynamics - The price elasticity of demand in the stock market is relatively low, meaning that price increases do not significantly dampen buying demand, while price decreases do not substantially increase demand [3] - Passive investing has become a dominant driver of equity prices, with estimates suggesting that for every $1 of passive inflows, the market's aggregate value increases by approximately $3 to $8 [8] - The market is increasingly acting like a casino, with a proliferation of leveraged ETFs and options trading, which adds volatility and risk to the investment landscape [9][10] Investment Strategy - The company employs a valuation-disciplined investment process that is highly price elastic, allowing for aggressive buying during market downturns and risk shedding during periods of greed [4] - The strategy focuses on diversifying portfolios by mixing potential energy (value) with kinetic energy (momentum), particularly in sectors like healthcare and materials that offer attractive free cash flow yields [18][21] - The company has identified Amazon as a compelling investment opportunity due to its strong balance sheet and potential benefits from AI, while exiting positions in companies like Expedia due to emerging competitive threats [21][22] Performance Overview - The ClearBridge Value Strategy underperformed its benchmark, the Russell 1000 Value Index, during a period of subdued returns for value stocks [17][24] - Stock selection in the healthcare sector contributed positively to performance, while the financials sector detracted from returns due to declines in specific holdings [19][20] - The strategy continues to find opportunities in undervalued stocks with high free cash flow yields, particularly in sectors that have fallen out of favor [18][24]

It’s a quirk in the booming world of passive investing: Famed tech fund QQQ is the most profitable offering in the ETF industry, but Invesco earns virtually nothing from running it. Now the asset manager is asking shareholders to change that https://t.co/QlModOzZJM ...