On Thursday, Musk teamed up with "Sister Wood" to shell passive investment.
It all started with a discussion sparked by venture capitalist Marc Andreessen. Andreessen believes that investment institutions such as BlackRock that focus on passive investment have great influence on the boards of a large number of invested companies, but in the strict sense, such institutions cannot accurately represent the voice of the majority of passive investors as "real shareholders", so it is inappropriate for passive investment institutions to be "too loud".
Musk agrees, arguing that "passive investment institutions often make decisions on behalf of actual shareholders that go against the interests of actual shareholders," adding that "we should turn to active investing, which has gone too far these days." ”
Today, "Sister Wood" Cathie Wood also joined the "enduring" discussion, she believes that if investors are too obsessed with passive investment, then they will miss Tesla's huge gains before entering the S&P 500 index in December 2020. At the same time, she believes that at the "time of the greatest technological change in history", the passive fund with a broad target is "shorting" subversive innovation. Further, she noted, "The accelerated shift toward passive funds over the past 20 years has been a massive capital mismatch. ”
For Twitter netizens to use modern portfolio theory as a support to challenge Musk: "According to modern portfolio theory, the most rational investment strategy is to buy market portfolio", Today Musk also added a response: "Passive/index investment is just an amplifier for active investment." If the quality of active investment declines, passive investment will suffer accordingly. In addition, if there are few investors who are actually active, then the decisions of these passive investment institutions can greatly increase the volatility of the company's valuation. ”
Over the years, as passive funds have continued to snatch the market from active funds, the debate about the advantages and disadvantages of passive and active investment can be described as "timeless".
The active investment side of the position believes that the professional investment ability of the fund manager can help investors obtain excess capabilities, and it is more conducive to improving market efficiency, such as "legendary investor" Peter Lynch said at the end of last year: active to passive is a wrong choice.
In addition to theoretical support such as modern portfolio theory, the views of higher management fees and fund managers' difficulty in outperforming the market for a long time are also the "attack weapons" of this faction - in this year, the flagship "Wooden Sister" Ark Innovation Fund (ARKK) has a retracement of up to 45%, and the opposing arguments seem to be more "powerful".