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A comment on “A Mild Recession”. Parent comment

Re:“A Mild Recession” by Rury on Thursday July 14, 2022 @02:00PM (#32099417)
If all investment activity was passive investment, there would be no pricing mechanism left in the market. If everyone just equally invested in everything, there'd be no discrepancy between stocks. Complete scam businesses would given value equally to businesses which actually do create value.

So, yes, passive investing helps stabilize the entire market to trade in tandem, but too much is a danger to the health & stability of our market and economy as it enables misallocation of capital.

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Re:“A Mild Recession” by SketchySeaBeast on Thursday July 14, 2022 @02:12PM (#32099552)
But that's not how the passive investing works - it's predicated off of curated indexes, so people are still making decisions. And there's not equal weighting in everything. What you're worried about isn't the current situation and it makes no sense that it ever would be.
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Re:“A Mild Recession” by Rury on Thursday July 14, 2022 @02:27PM (#32099736)
Unless weighting is done by business fundamentals, it still enables misallocation of capital. Many curated indexes and decisions are based on market cap, liquidity, public float, sector classification - all hardly fundamental.
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Re:“A Mild Recession” by SketchySeaBeast on Thursday July 14, 2022 @03:04PM (#32100181)
> Unless weighting is done by business fundamentals, it still enables misallocation of capital.

Is it your assertion that without index funds this would be occurring? We just saw deliberate decisions to buy companies like TSLA and GME that stronly argue against that.

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