Mike Green (The gravitational force of passive investing on capital allocation and geopolitics)

 

• 00:00:31 How Mike researched and developed his theory of a market bubble in passive investing/ index investing? Are markets about information or transactions?
• 00:08:01 Is the bubble of investing just a (bigger) change of the NIFTY fifty or the NASDAQ bubble in the 2000's?
• 00:13:53 Does Mike's theory of passive investing predict higher volatility due to the changes in market structure?
• 00:19:22 Is our low productivity growth linked to inefficient capital allocation due to passive investing skewing investments? Is the Fed to blame for the asset bubbles?
• 00:26:57 Is the Fed's own forecast model broken now that markets follow a flow model much more than a valuation model?
• 00:31:01 Is our retirement model the problem or the solution? Is a future crash inevitable? Is the small enterprise dead forever?
• 00:39:13 How should contrarian investors position themselves? How committed can one be to an 'impending bubble'?
• 00:47:45 What is America's contribution to the world? Does China now have the better approach to capitalism? Can we ever come up with companies that do things cheap and better (instead of just better)?
• 00:55:05 Are societal changes solely to blame for changes in productivity growth?
• 01:01:01 Can longevity research (and the ability to live forever) change how the world will grow?
• 01:09:01 Should we always be 'smart investors' or is 'going with the crowd' often better? What are the dilemmas of the contrarian or cataclysmic investor? How do high profile investors deal with this?
• 01:21:10 What other bubbles does Mike see in today's market and how can retail investors trade against such a bubble formation (if they choose to do so)?
• 01:26:48 Will China start a hot war in Asia in the next 15 years? Will trade (and China's trading partners) matter? How is the chess board stacked towards such a war. What are China's incentives?

 

Mike Green has been a student of markets and market structure for nearly 30 years. Mike works with Simplify to create ETF products that give retail investors an edge. Before that Mike has worked with Logica Capital Advisers and Thiel Macro.

You may watch this episode on Youtube - #100 Mike Green (The gravitational force of passive investing on capital allocation and geopolitics).

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Torsten Jacobi: Mike, welcome to the Judgment Call podcast. Thanks for coming. We appreciate that.

Mike Green: Thank you, Torsten. It's a pleasure to be here.

Torsten Jacobi:  Hey, so your claim to fame is really the passive investment bubble, and you also recently joined Simplify, one of the most interesting ETF creators out there. My first question is for listeners out there who haven't heard of this particular bubble that you've been describing for a couple of years now, what are the core tenants of your thesis there, and what do you think is wrong with passive investment? Because a lot of us think of this as a very safe and potentially very lucrative investing stone.

Mike Green: Well, I think this is one of the challenges that in terms of my theory and what I've observed about the market and how it's playing out is that for most investors, there's a natural attraction to being in a passive vehicle. Your objective is very much to just try to match the return of the market, and so it feels like it is the right choice, and you're seeking out lower fees, you're seeking out broad exposure, you're diversifying as you would expect, etc. And so it is a winning combination from the investor sta