Passive Investing Critic Michael Green Warns of Market Structure Crisis in New Interview
Michael W. Green, a longtime critic of passive investing's impact on equity markets, is renewing his warnings about fundamental changes to market structure in a new interview published this week on the Net Interest podcast.
Green, who maintains an active presence on X and Substack, has spent years arguing that the rise of index funds and passive investment vehicles has created what he describes as systemic risks in public markets. The interview, hosted by finance writer Marc Rubinstein and released January 20, marks the latest effort to draw attention to these concerns among institutional investors and finance professionals.
The conversation, titled "The Tragedy of the Commons in Passive," invokes the economic concept describing how individual rational actors can collectively deplete shared resources. Green's application of this framework to passive investing suggests he views the growth of index funds as creating negative externalities that individual investors may not recognize when making allocation decisions.
For CFOs and finance leaders, Green's thesis carries implications for how they think about their own shareholder base and capital markets more broadly. As passive funds have grown to represent an increasingly large share of equity ownership—particularly in large-cap stocks—questions about price discovery, corporate governance, and market efficiency have moved from academic curiosity to practical concern.
The interview represents the sixteenth episode of Net Interest Extra, Rubinstein's paid subscription series featuring conversations with finance experts. Previous guests have included private equity returns expert Ludovic Phalippou and blockchain analyst John Andrews, suggesting the podcast targets a sophisticated audience of finance professionals seeking deeper analysis beyond headline news.
Green's warnings about passive investing have historically been controversial within the asset management industry. Index fund providers argue that passive vehicles have democratized investing by lowering costs and improving access, while critics like Green contend that the shift away from active price discovery creates fragility in market structure that may not be apparent until periods of stress.
The timing of the interview is notable as finance leaders prepare for 2026 budget cycles and treasury operations. Questions about market liquidity, the reliability of public market valuations for treasury management, and the composition of shareholder bases all connect to the broader debate about passive investing's impact on capital markets.
The full conversation runs 58 minutes and is available only to paid subscribers of Net Interest, reflecting the increasingly common model of premium finance content targeting institutional audiences willing to pay for specialized analysis.
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