/biz/ - Business & Finance

[Anonymous No.19901989]

Overall, does passive investment - especially investment in large index funds - actually produce value for the economy (i.e. increase production or lower the costs of goods and services, promote innovation, reduce financial instability, etc.)?

Passive investment is obviously beneficial on a unilateral basis, but what about on the whole?

[Anonymous No.19902672]

>>19901989
You can ask the same question about stocks since (physical replicated) ETFs are just buying stocks. The problem is that the markets efficiency is decreasing if passive investing is increasing since less and less people are actually researching the „true“ value of stocks. Buying passive investments is essentially free riding on the research efforts of others. In the extreme case where all investment is passive, stocks would not drop anymore due to bad events if it is listed in a mayor index.

[Anonymous No.19902847]

>>19901989
In theory buying equity and debt would decrease the cost of debt for companies, making it easier and cheaper for them to acquire debt and invest said debt (or income from selling equity) in projects that would be beneficial to everyone
However markets were completely broken by central banks, it still works like that for the first half but nowadays the debt is used to buyback equity so the C suite gets ridiculous bonuses from investors and from selling their stock options, investing their income in nice hookers, blow, child prostitutes, super PACs to give them more power and good old NGOs that make your life miserable importing niggers or "fighting" climate change