Loading Episode...
Top Traders Unplugged - Niels Kaastrup-Larsen 4th August 2020
GM06: The hidden danger of Passive Investing ft. Michael Green
00:00:00 01:01:21

GM06: The hidden danger of Passive Investing ft. Michael Green

In today’s episode, we are joined by Michael Green. Michael has over 20 years as a portfolio manager, mainly in the global macro space. Recently he has become well known because of his work on the shift to passive investing, and inevitably this was one of the topics we wanted to ask Mike about. Our conversation wasn’t limited to that however, and we also discussed comparisons between the present day and previous historical crisis (going back to the Roman Empire!), as well as many other interesting subjects.

Topics Discussed in this Episode:

  • Passive investing
  • ETFs and target date funds
  • Intergenerational inequality
“(The) growth of passive is now basically built into the system. From a regulatory framework, all the new money that comes into the U.S Savings and Investment accounts (primarily in the form of 401Ks and IRAs), are coming in passive vehicles.”
  • Real interest rates over history
  • Mean reversion and momentum
  • Negative interest rates
“I think negative interest rates are absurd and that they’re a view that I articulated back in 2015 and is now, I think, increasingly accepted that they’re ultimately harmful to the banking system. They create a tax on the banking system.”
  • Leverage: recourse vs no recourse (limited liability)
“I think another component that people generally under-appreciate is that while we all complain about leverage and we complain about the high levels of debt, the flavor-de-jour of how we solve this is something like risk parity which says, “OK, let’s lever our portfolio 10X in the fixed income space, and let’s add…”
  • MMT
“MMT is right but it offers almost no prescriptions for how that money should be spent. So, by handing it over to the politicians, we’re at least in a situation where you could see outcomes of how that money gets spent that we have never predicted.”
  • Yield enhancement strategies

Follow Niels on Twitter, LinkedIn, YouTube or via the TTU website.

Follow Rob on Twitter.

Follow Moritz on Twitter.

Follow Michael on Twitter.

IT’s TRUE 👀 – most CIO’s read 50+ books each year – get your FREE copy of the Ultimate Guide to the Best Investment Books ever written here.

And you can get a free copy of my latest book “The Many Flavors of Trend Following” here.

Learn more about the Trend Barometer here.

Send your questions to info@toptradersunplugged.com

And please share this episode with a like-minded friend and leave an honest rating & review on iTunes so more people can discover the podcast.