Everyone Is a Momentum Investor Now — Animal Spirits
Everyone Is a Momentum Investor Now
Flows, concentration and the uncomfortable arithmetic of index ownership.
A conversational episode on what passive flows have done to index concentration and whether that changes the risk of holding the index. The hosts work through the arithmetic — how much of the move is mechanical, how much is earnings — and land on the view that concentration is a return-sequencing problem rather than a bubble claim. They also cover what an advisor actually tells a client about it.
Index concentration is high by history but the earnings share has moved with it — that weakens the bubble framing.
Passive flows amplify existing weights; they do not choose them.
The practical risk is sequence-of-returns for anyone drawing down, not permanent impairment.
Rebalancing discipline matters more in a concentrated index, not less.
Companies & tickers
- Vanguard
- BLK
Topics
- Index funds
- Concentration
- Flows
- Asset allocation
Original summary, written from the episode transcript. Full episode page