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 fundamental changes in market structure in a new interview published January 20, 2026, on the Net Interest podcast hosted by Marc Rubinstein.

Green, who maintains active presences on X and Substack, has spent years arguing that the shift toward passive investment vehicles is creating what he describes as systemic risks in equity markets. The interview, which runs nearly an hour, marks his latest effort to draw attention to what he sees as underappreciated structural changes in how capital flows through public markets.

For CFOs and finance leaders, the conversation touches on issues that increasingly affect corporate capital allocation decisions, from how share buybacks interact with index fund flows to how passive ownership concentrations may be altering the relationship between management teams and their shareholder base. As passive funds have grown to dominate equity ownership at many public companies, questions about their impact on market pricing, corporate governance, and capital formation have moved from academic curiosity to practical concern.

Green's thesis centers on what he frames as a "tragedy of the commons" problem in passive investing—a reference to the economic concept where individual rational decisions lead to collective irrationality. His argument, which has generated both supporters and skeptics in the investment community, suggests that as more investors choose the individually sensible path of low-cost index funds, the aggregate effect may be creating market dynamics that differ fundamentally from traditional price discovery mechanisms.

The timing of the interview is notable as passive funds continue to capture the majority of new flows into equity markets. For corporate finance teams, this shift has practical implications: the composition of the shareholder base increasingly consists of investors who by definition cannot sell individual positions based on company-specific concerns, potentially changing the calculus around everything from capital structure decisions to M&A strategy.

Rubinstein, whose Net Interest publication focuses on financial industry analysis, has built a reputation for long-form conversations with market structure experts. Previous episodes in the series have covered topics ranging from private equity return measurement to the narratives that underpin market movements, suggesting the passive investing discussion fits into a broader examination of how modern markets actually function versus how they're commonly understood.

The interview arrives as finance leaders grapple with a market environment where traditional assumptions about investor behavior may no longer hold. When a significant portion of your shareholder base is algorithmically required to hold your stock regardless of fundamentals, the question of what that means for capital allocation—and whether it matters—becomes more than theoretical.

Green's warnings have historically been met with pushback from the asset management industry, which points to the benefits of low-cost investing and questions whether passive flows are large enough to fundamentally alter price discovery. The debate, however, continues to evolve as passive ownership percentages climb and finance professionals confront the practical realities of managing companies in this new structure.