Impact of index investing on the markets

[sutebayashi]

I follow a primarily passive index based investing approach, and believe that most here do too. I’m gonna be sticking with that.

That said, where is the recession? The US yield curve has been inverted for a goodly while now but the US economy and stock market haven’t yet fallen to pieces.

Something going through my head recently is whether the impact of passive index investing in recent years could be buoying the stock market. In the olden days the active strategies were apparently far more dominant, but with passive index investing, it doesn’t matter how bad things might get, investors like most of us are going to continue to buy the index again month after month, no matter what happens. (Or maybe some passive investors will all panic madly when push does come to shove, we’ll see.)

That said, things don’t seem so bad economically, yet, but what do you all think?
Could this year be a Sell In May episode? Or could the index investing movement have changed the game somewhat?

(I repeat, I’m sticking with buy and hold myself… but still it’s interesting to watch these things.)

Edit: did some googling on the passive investing thing, and it isn’t a thing really apparently: https://www.cnbc.com/amp/2023/02/22/gro ... -says.html

[Gulliver]

Something going through my head recently

An extension of your thought process might be- to what extent the ratio of institutional to retail investors affects global markets. This could be insightful when taking different country’s government spending and central bank policy into consideration (how does it favor individual investors, what kind of corporate welfare is being handed out, to what extent are they investing passively, etc.).

Also let’s not be afraid to talk about the rabid 500 pound bear in the room: The war in Europe… Nobody will be able to go all in until that is resolved.