Trends

Passive Investing – The Gift that Keeps Giving…Until it all Vanishes at Once

I truly believe that one day this is going to happen. Passive investing now accounts for more than HALF of the US stock market and is growing. The movement has officially been made and investors do not use brokers anymore as they run to passive ETFs and index funds. This has been created just over THE PAST 10 YEARS.

At the beginning of the bull run active investments held nearly a 3 to 1 advantage over passive fund assets. That has shrank to…almost ZERO ADVANTAGE present day.

Courtesy of CNBC and Morningster

This type of investing has been killing it over the past decade and continues to gain traction. I believe that at some point this will be a HUGE PROBLEM. Once the next major downturn in the stock market starts, and these PASSIVE inflows slow, then stop, and become outflows, you are going to have a market that may undergo a faster elevator down that has ever been seen.

Over the past 10 years, the passive inflows has helped push the market higher and higher, over and over again. Well when the tide turns…the passive inflows will not push the market down over and over again, they will all run for the exit at once.

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