Couverture de The Winners and Losers of Index Investing | #435

The Winners and Losers of Index Investing | #435

The Winners and Losers of Index Investing | #435

Écouter gratuitement

Voir les détails

Offres de saison | 0,99 € par mois pendant les 3 premiers mois

5,99 €/mois par la suite. Des conditions s’appliquent. Annulation mensuelle possible.
À propos de ce contenu audio
 In this episode, we're joined by Martin Schmalz, Professor of Finance, Economics, and Real Estate at the University of Oxford's Saïd Business School, for a wide-ranging conversation about index funds, common ownership, investor behavior, and wealth management. Martin's research challenges us to look beyond the benefits of indexing for individual investors and consider what happens when everyone makes the same rational choice. Could the growth of index funds affect asset prices, expected returns, and competition between companies? We explore the equilibrium effects of indexing, how common ownership might influence competition and consumer prices, and what existing antitrust laws could mean for large institutional shareholders. Martin also explains why wealth creation and wealth preservation require different mindsets, why wealthy investors can struggle to embrace passive investing, and how delegated investment management can help people stick with an investment plan when markets become uncomfortable. We finish with a discussion of family offices, the compounding impact of costs, and Martin's thoughts on why thinking like an economist might not always make us happier. Sources From Today's Episode — https://zbib.org/a79d2e68294b4263a796d83123543200 Key Points From This Episode: (0:01:13) Why indexing has been such a valuable innovation for investors, and the central question of whether its widespread adoption creates unintended market-wide consequences. (0:03:24) Why the equilibrium effects of indexing matter more than simply comparing index funds with individual stock picking. (0:05:55) How lower-cost indexing changes investor behavior, asset demand, stock prices, and expected returns. (0:08:35) The possibility that greater demand for diversified equities raises prices and lowers future expected returns. (0:12:03) Why the impact of indexing differs across investors depending on wealth, risk aversion, and asset holdings. (0:13:35) Indexing as a potential tragedy of the commons, where individually rational decisions may have collective effects. (0:15:15) The theory of common ownership and concerns about competition when the same investors own competing firms. (0:19:05) Why common ownership is not solely an index-fund phenomenon, with active investors, family offices, and other large owners also playing a major role. (0:23:11) What airline-industry research suggests about the relationship between common ownership and consumer prices. (0:28:00) Competing explanations for the evidence on common ownership, including weaker monitoring and reduced incentives to compete aggressively. (0:31:31) Why theoretical models should not be treated as proof of real-world outcomes. (0:35:14) How existing antitrust laws, including the Hart-Scott-Rodino Act, Sherman Act, and Clayton Act, relate to common ownership. (0:38:00) Potential policy responses, including ownership restrictions and limits on voting rights. (0:41:32) Why many wealthy investors fail to index, and how the skills that create wealth often differ from those required to preserve it. (0:46:00) The costs of poor diversification, excessive trading, market-timing mistakes, and inadequate due diligence. (0:49:59) Horizon-dependent risk aversion: why people become more risk-averse when potential losses feel immediate. (0:55:46) Why delegated investment management can act as a commitment device that helps investors avoid costly behavioral mistakes. (0:58:39) How wealthy investors and family offices can still fall victim to expensive products, complexity, and poor decision-making. (1:02:00) The compounding cost of fees and complexity, and why simple, diversified portfolios may outperform many private-market approaches. (1:08:35) Why economic thinking is powerful for markets but may be less useful for personal happiness, leading to a broader discussion of success, well-being, and creating value for future generations. Links From Today's Episode: Martin on LinkedIn — https://www.linkedin.com/in/martin-schmalz-19060a5/ Martin on X (for antitrust-related posts) — https://x.com/martincschmalz?lang=en Martin's website — https://sites.google.com/site/martincschmalz?pli=1&authuser=0 Meet with PWL Capital: https://pwlcapital.com/ PWL Team — https://pwlcapital.com/our-team/ Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder on Spotify —https://open.spotify.com/show/6RHWTH9iW7hdnA7eAg7ukO?si=fe7f60349b584026 Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
adbl_web_anon_alc_button_suppression_t1
Aucun commentaire pour le moment