1/ I love learning about the markets. There are some brilliant people I’ve found on Twitter who have provided great insights (among others):

@JeffSnider_AIP
@LynAldenContact
@LukeGromen

But this thread is (mostly) about @profplum99

👇👇👇👇👇

2/ Mike has an encyclopedic knowledge of market history. This interview by @DiMartinoBooth (who I also have a lot of respect for) puts that on clear display.

https://t.co/4hSd2TG4du

Mike’s explanation of passive investing and its effects on the markets was eye-opening.

3/ According to research conducted by Anadu et al for the Federal Reserve Bank of Boston, passive funds made up 48% of US equity assets under management in March 2020. That number was just 14% in 2005. Meaning 8.6% annualized growth over 15

4/ Per Mike, “passive funds have this really simple algorithm: if you give me cash, I buy.” No fundamental valuation, just buying the current market-weighted index, which means a stock gets greater representation in your fund the higher its current market value.

5/ Employers and pension fund managers are predictably contributing to IRAs through fixed salary percentages on a monthly basis. And passive funds typically hold tens of basis points of cash on the sidelines because, per Mike, “it’s toxic to their business model.”