Somebody Has to Pick the Stocks

Adriana Robertson is a law professor at the University of Chicago who, a decade ago, got fixated on index funds. They seemed so important – the best, or maybe only, good investing advice was to put your money in an index fund, right? So, she wondered, what exactly is an index fund? How does one get made? She poked around and couldn’t find research that answered her questions. So unfortunately she had to do it herself. And what she found was that these “passive” investing vehicles aren’t really passive at all. At the end of the day, somebody has to pick the stocks. She joins us to tell us what index funds – and for that matter, capital markets in general – are supposed to be doing, and if they are actually doing it. 

Further Reading:

Adriana Z. Robertson - Passive in Name Only: Delegated Management and “Index” Investing

Harry Markowitz - Portfolio Selection

Lucian A. Bebchuk - The Case for Increasing Shareholder Power

Yueran Ma - What Adam Smith Didn’t Foresee About Capitalism