Michael Green
Michael Green is the chief strategist at Simplify Asset Management. He's best known for his research on how passive investing distorts market structure and valuations.
This post summarizes his talking points.
Something Is Very Wrong With the Stock Market | Michael Green (October 5, 2026)
Passive flows into the stock market account for more than 100% of the price movements.
Smaller stocks aren't experiencing the same outcomes cause they're not seeing the same passive flows.
Market cap weighting disproportionately forces the largest stocks up.
There is much lower demand for the smaller stock shares than the larger ones.
We assume the economy is fine because the stock market is moving toward all-time highs.
Many members of the economy don't feel like they're at their personal all-time high.
We switched retirement from defined benefit to defined contribution in 1978 with the 401(k).
We didn't realize that this would provide a sizeable benefit for the largest companies in our economy.
Smaller companies suffer from a high cost of funds.
This discourages innovation. If you build a product then a large company will just copy you. And you can't realistically sue them.
Bond yields aren't rising cause inflation is rising. They're rising cause the real interest rate is rising.
There is a repricing of yields across the Western world, regardless of their indebtedness. That includes Australia with debt:GDP of 25%.
Companies not part of global bond indices are not seeing this at all.
Market cap weighted bond indices are also magnifying market moves.
He's not worried about the debt. He's worried about the implications of how hiking rates impacts the cost of capital for small businesses and consumers (auto loans, mortgages).
Boomers are receiving the benefit of higher interest rates via higher income.
Lots of stock market wealth is held by people with incredibly high net worth. We're not sure when they will have to sell.
We're not sure how long the K-shaped economy will last.
Boomers had to save aggressively in a low interest rate environment.
We are in uncharted territory and we can't draw parallels to previous generations.
Our entire retirement system is based on the stock market.
Keynesian beauty contest: it doesn't matter who you think is the most beautiful woman, it matters who everyone else thinks is the most beautiful woman.
Some areas have experienced extraordinary investment, but it's from a mechanical process. For example, bonds from 2018-2019 with 0% rates were a bad investment. People were investing in them just to have a balanced portfolio.
Value investing is dead because market cap is dominating. It will be hard for this to reverse.
Gold will be the ultimate beneficiary if we decide to print. The quantity of gold is relatively fixed. It is a barbarous relic, but it truly is scarce.
Peter Thiel asks everyone: what's one thing you believe that nobody else believes is true?
Michael's response: "Passive investing is anything but passive."
He's concerned about the leadership in AI about their world view that we should replace humans.
Tier 1 Asset Management: They've created a "passive aware" style of investing. They're offering an S&P 500 replacement.