Has passive investing made the market more unstable?
This is a question some are starting to take a look at. Over the past decade, the amount of liquidity in the markets has gone up exponentially. Many blame this on easing done by the central banks.
Active investors bring something to the table. They are a part of the process of price discovery. Passive investors, on the other hand, simply buy index funds while enjoying the profits. It is easy to see how the policites of the central banks of trying to increase asset prices for the "wealth effect" did this.
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