Passive Investing Critic Michael Green Warns of Market Structure Crisis in New Interview

Michael W. Green, the longtime critic of passive investing's impact on equity markets, has renewed his warnings about what he describes as fundamental structural changes threatening market stability, according to an interview published January 20, 2026 on the Net Interest podcast.

Green, who maintains active presences on X and Substack, has spent years arguing that the growth of index funds and passive investment vehicles has created what host Marc Rubinstein framed as a "tragedy of the commons" scenario in public markets. The 58-minute conversation marks the latest in a series of interviews Rubinstein has conducted with finance experts examining structural shifts in capital markets.

The interview arrives as CFOs and finance leaders grapple with questions about how passive capital flows affect corporate valuations, price discovery, and the traditional relationship between company performance and stock price. Green's thesis—that passive investing creates systemic distortions—has gained attention among corporate finance professionals who increasingly question whether their equity is being priced based on fundamentals or index inclusion mechanics.

For finance executives, the implications extend beyond theoretical market structure debates. Companies included in major indices may see their valuations influenced more by passive fund flows than by quarterly earnings or strategic decisions. Conversely, firms excluded from major benchmarks may struggle to attract capital regardless of operational performance—a dynamic that fundamentally alters how CFOs think about investor relations and capital allocation.

Green's warnings have historically focused on how passive funds, by design, must buy stocks regardless of valuation when capital flows into the fund, and must sell when capital exits. This mechanical buying and selling, he argues, creates feedback loops that disconnect prices from underlying business fundamentals. The concern for corporate finance leaders: if a significant portion of your shareholder base operates on autopilot, traditional methods of communicating value may lose effectiveness.

The interview is part of Rubinstein's Net Interest Extra series, which has recently featured conversations on topics ranging from private equity return measurement with Ludovic Phalippou to private credit with Huw van Steenis. The podcast targets finance professionals seeking deeper analysis of industry trends beyond headline news.

The timing of Green's latest public commentary is notable as passive investing continues to capture market share. While the interview itself does not provide new data on passive fund flows, the ongoing conversation reflects persistent questions among finance professionals about market structure evolution and its implications for corporate strategy.

For CFOs, the core question remains practical: if passive capital increasingly dominates equity markets, how should that reality inform decisions about capital structure, investor targeting, and even M&A strategy? Green's continued prominence in these debates suggests the finance community has yet to reach consensus on answers.

The full interview is available to paid subscribers of Net Interest, Rubinstein's Substack publication focused on financial industry analysis.