QOTD: The New Nifty Fifty

Can this go on forever? Highly doubtful. While indexation is efficient and effective, there has never been a really good idea on Wall Street that hasn’t been taken to a foolish extreme (mortgage-backed securities, triple-levered exchange-traded funds, or smart beta). The situation is reminiscent of the old tale about the poker-game host who admonishes his friends, saying, “Let’s all play our cards carefully and maybe we can all make some money tonight.”

Just as only 10% of investors can be in the top decile, so inevitably the continuing rise in passive investing will create both winners and losers.