Einhorn Says Markets ‘Fundamentally Broken’ by Passive Investors

Greenlight Capital was forced to shift its strategy as the growth of passive investing and algorithmic trading transformed markets, founder David Einhorn said.

“I view the markets as fundamentally broken,” Einhorn, 55, said on Barry Ritholtz’s Masters in Business
podcast. “Passive investors have no opinion about value. They’re going to assume everybody else has done the work.”

WATCH: David Einhorn says “I view the markets as fundamentally broken.”

Source: Bloomberg

Investors have increasingly looked beyond active money managers, instead opting for passive strategies with lower fees. By late 2019, passive vehicles such as index funds accounted for more than half of publicly traded assets in US equity funds.

That means fewer ...