Passive Bubble?

Don and Tom dismantle the “passive bubble” trope, walk through Morningstar’s active/passive scorecard (great one-year anecdotes vs brutal long-run stats), and recap the steady shift of investor dollars toward indexing. A caller tries to drag the show into politics via data independence (BLS/Fed), prompting a level-headed reminder that markets price reality over rhetoric. The TSP’s revamped I Fund gets kudos for finally adding emerging markets (with a nudge to pair it with value tilts outside TSP). Two meaty segments cover long-term care: costs, weak benefits on traditional policies, when hybrids can make sense, and why many households effectively self-insure or rely on Medicaid as the backstop. Another caller asks about Die With Zero; verdict: great mindset—if your plan already covers worst-case needs. 0:05 Holiday opener, calls invite, “passive is a bubble?” setup 2:06 Is price discovery “broken” if money flows to index funds? 2:40 Active still >50% of U.S. fund assets; global passive ≈20% AUM 4:22 Morningstar barometer: 42% of active beat in 1-yr… so 58% didn’t 6:36 Long-run stats: 3-yr 17.7%, 5-yr 8.2%, 10-yr 2.5%, 15–20-yr ≈~1% of active beat 8:32 Flows: from 1 in 20 dollars passive (’97) to 1 in 2 today; costs matter 10:58 Caller (Sammamish): data independence, politics, rates, inflation risk; market effects vs reality 16:19 Inbox: TSP update—I Fund now includes EM; still thin on value/small tilts 18:32 Why add small/value (incl. intl); performance pops don’t change the case 22:26 Caller (LTC): traditional vs hybrid; math on premiums, caps, Medicaid backstop 26:37 Basic quote math: ~$1,900/yr at 60 for ~$150k cap; lump-sum hybrids trade-offs 29:10 Caller (Maya, Los Altos): Die With Zero—great if plan covers tail risks; most retirees can’t 34:38 Caller (Americus, GA): Mutual of Omaha pitch; self-insure debate; taxes/deductions misconceptions 38:55 Wrap: how to send questions; where to get advice Learn more about your ad choices. Visit megaphone.fm/adchoices