Meet with PWL Capital: https://pages.pwlcapital.com/en-ca/contact-us?utm_source=content&utm_medium=youtube&utm_campaign=rationalreminder_yt Are index funds a silent disruptor? Or are the concerns overblown? In this grab-your-popcorn episode, Michael Green returns to the show after his previous appearance elicited a wave of compelling feedback from listeners. These included very smart individuals in academia and practice who were interested in hearing a counter perspective. Joining Michael today for a lively debate is Randolph Cohen, Senior Lecturer of Entrepreneurial Management in the Finance Unit at Harvard Business School. In our conversation, Michael shares his deep concerns about how index funds and target-date funds might be distorting financial markets, honing in on the tension between market efficiency and price elasticity. Randolph counters with an academically grounded perspective, drawing on his PhD and years of research and teaching at one of the world’s leading business schools. With Ben and Cameron moderating, the discussion explores both sides without reaching a definitive conclusion. Tune in to witness this spirited, nuanced exchange and decide where you stand! Timestamps: 00:00:00 Intro 0:07:35 Defining Passive Investing 0:12:23 How Much of the Market Held by Passive Investors 0:15:22 Describing Concerns About the Rise of Passive Investing at a High Level 0:24:24 Three Pieces of Evidence Supporting Their Views 1:37:13 The Cross-Sectional Impact on Stock Valuations from Index Investing 1:47:10 The Implications for End Investors 1:53:40 What a Typical Retail Investor Should Think About Doing with the Information Covered 2:04:24 Why Industry and Academia Don't Share Mike's Level of Concern 2:07:38 Where Randy Lands on the Rise of Passive After Hearing Mike's Concerns 02:16:15 Addendum Links From Today’s Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Michael Green on Substack — https://substack.com/@michaelwgreen Michael Green on LinkedIn — https://www.linkedin.com/in/michael-green-9a15142/ Michael Green on X — https://twitter.com/profplum99 ‘Yes, I give a fig… Thoughts on markets from Michael Green’ — https://www.yesigiveafig.com/ Randolph Cohen — https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6597 Randolph Cohen on LinkedIn — https://www.linkedin.com/in/randy-cohen/ Dangerous Visions Podcast — https://podcasts.apple.com/us/podcast/dangerous-vision-with-randy-cohen/id1477519445 Episode 302: Michael Green — https://rationalreminder.ca/podcast/302 Episode 322: Marco Sammon — https://rationalreminder.ca/podcast/322 Episode 310: Antoinette Schoar — https://rationalreminder.ca/podcast/310 Episode 212: Ralph Koijen — https://rationalreminder.ca/podcast/212 Episode 314: Valentine Haddad — https://rationalreminder.ca/podcast/314 Episode 224: Scott Cederburg — https://rationalreminder.ca/podcast/224 Episode 284: Scott Cederburg — https://rationalreminder.ca/podcast/284 Books From Today’s Episode: Irrational Exuberance — https://www.amazon.com/Irrational-Exuberance-3rd-Robert-Shiller/dp/0691166269 Papers From Today’s Episode: ‘The Disappearing Index Effect’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4294297 ‘Passive Investing and the Rise of Mega-Firms’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4851266 ‘Retail Financial Innovation and Stock Market Dynamics: The Case of Target Date Funds’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3723265 Valentine Haddad on Google Scholar — https://scholar.google.com/citations?user=PlPjP48AAAAJ ‘How Competitive is the Stock Market? Theory, Evidence from Portfolios, and Implications for the Rise of Passive Investing’ — https://papers.ssrn.com/sol3/Papers.cfm?abstract_id=3821263 ‘Household Portfolios and Retirement Saving Over the Life Cycle’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4068063 ‘The equity premium: A puzzle’ — https://www.sciencedirect.com/science/article/abs/pii/0304393285900613 ‘In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3686935