If you think it's a wakeup call about passive investment I think you're asking the wrong question. The vast majority of people do not want to become experts in the financials of 800 different companies in order to maximize their account return on investment over the next 20 years. It's a part time job to do that. Some people do that successfully but most people recognize that they won't. Passive investment was supposed to be a tool for those people. If you ignore all of that, then sure they can just change the rules whenever they like. But that totally ignores the reason a lot of these rules exist in the first place. In my book we're about to get a taste of why we don't want private enterprise responsible for this stuff in the first place.
replyExactly all this. The whole idea of passing investing is "hardly any of us know better than the market as a whole." If you don't agree with that, then you don't agree with passive investing. Which, whatever. Live your life.
replyBut the story is not about all indices being wrong, the story is about index management being corrupted. Like bond ratings on mortgages in the run-up to 2008.
If you dont like it, you need to choose something else. I dont know how people can keep throwing money at the thing they dont like and then complain it isnt doing what they want.
reply"Im too busy to spend 30 minutes to move my retirement somewhere I trust" just doesnt cut it.
I'm not arguing for myself, I'm arguing for the tens of millions of people who do not understand this system, are not aware of how it works, and are constantly pressured through employer plans, tax deferment, and other aspects of the system to choose the path of least resistance and put their money into a 401k. For a system to work properly it has to account for all of the users and not the top 5% or 1% of the users.
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