Carson Block of @muddywatersre writing in the FT lays the blame of stonk gyrations like GameStop (sub $20 on 12 Jan, up 18-fold in 10 trading days) squarely on low rates and passive investing.
This is Hogwash, Blatherskite, Buncombe, and
It was 1 stock out of tens of thousands in the world which moved that way and has become a meme unto itself of fantabulous stock and social movement.
Carson talks briefly about low rates and government bailouts, which theoretically should affect the others.
But then he falls into the trap that many others who do not understand passive investing do.
This is NOT how passive investing works.
To be clear: if a passive fund owns $1bn of stock of an index which has a Sum (Stock Float Shares x Price) of $1trn, that fund will own 1/1000 of the float shares of each stock.
If the price of 1 stock rises 23-fold in 11 days, passive investors will do...
If the rise in that 1 stock leads to the index float market cap moving to $1.02trln, then if the fund receives an extra $100mm, it will go buy exactly $100mm/1.02trln of the float of each stock in the index (i.e. just under 1bp - of EACH stock - Apple, AMZN, and GME).