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"When buying and selling are controlled by legislation, the first things to be bought and sold are legislators." - P.J. O’Rourke
I’m generally a fan of index investing for most people. Historically, indexing was a brilliant, low-cost way for investors to free-ride on the price discovery done by active managers (longs and the occasional evil ladder-attacking short seller). The market did the hard work of figuring out what a company was worth, and the index fund simply bought a representative slice of the market. The index was the tail; price discovery was the dog.
Today, the tail is violently wagging the dog. And the dog has the shits. Trillions of dollars are blindly sloshing around in passive funds, and index inclusion dictates market structure rather than reflecting it.
Enter the whores (metaphorically speaking) at Nasdaq.
Nasdaq recently circulated a Nasdaq-100 Index “Consultation” (located here). They are officially seeking feedback from investors on proposed updates to their index methodology. But let’s be real: this “consultation” is Nasdaq-speak for letting us know what they are going to force feed us, like a baggy foie gras duck. A thinly-veiled blueprint for how to forcefully transfer wealth from the retirement accounts of passive retail investors directly into the pockets of corporate insiders and early investors.
Source: Google (not a shitco) Gemini Nano Banana 2
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