Markets May Be on the Verge of a 'Passive Bubble' Bursting

The video discusses the doubling of the market to 16% and the presence of an index bubble. Vincent from Delaware Divie NTL FC Stone Financial highlights the passive bubble, where more indexes exist than individual stocks. He suggests that active managers focus on stocks under-owned by ETFs, as they are cheaper and less volatile. The video explores the debate between value and growth investments, the impact of interest rates on REITs, and the demand for tech stocks. It concludes with the unintended consequences of tech stock options in the passive bubble.

What is one reason active managers should focus on stocks under-owned by ETFs?

• They are more expensive.

• They are less likely to be destabilized by large inflows and outflows.

• They have higher equity risk premiums.

• They are included in more indices.

What does the rise in passive investing lead to, according to the second section?

• Increased stock volatility.

• More stocks being included in indices.

• Higher equity risk premiums.

• Inefficiencies and overvaluation of stocks.

What is a potential consequence of high passive ownership in REITs?

• Increased stock picking by investors.

• Vulnerability to ETF outflows driven by rate increases.

• Decreased demand for tech stocks.

• Higher interest rates.

Why is there a shortage of tech stocks available for ETF investors?

• They are not included in any indices.

• They are heavily owned by insiders.

• They are not popular among active managers.

• They have low market capitalization.

What is the impact of tech stocks being heavily owned by insiders?

• It increases the number of available shares for ETFs.

• It leads to a shortage of stocks for ETF investors.

• It results in higher equity risk premiums.

• It decreases the demand for tech stocks.