Passive Investing Broke Market Oversight (CLIP)- Dave Collum and Ed Dowd

本站添加: 2026-05-10

[00:00:00]Dave, Ed, thanks for doing this. Uh, appreciate you guys both. It's It's funny, Ed, you and I spoke, it was almost four years ago, almost to the day, May of 22, and um, you know, our worlds were in a I was in a different space back then when you and I first talked. And then Dave, you and I have been speaking now for three years. I think Dave, I think you're the most uh, bus, like the most timed appearances on my show. I think it's you now. I think you have the trophy.

[00:00:24]>> So, you're going down the tubes. Okay.

[00:00:26]Eddie Eddie Eddie and I go way back. We go how many years back? How far back?

[00:00:30]>> We've been talk we've been talking about the shenanigans for a long time. There's been shenanigans before COVID. We were on them. We We were very suspicious of the world that was presenting itself to us.

[00:00:40]>> Very suspicious. Very suspicious.

[00:00:44]>> How did you So, what was the initial I think people would be curious about this. What was the introduction like for you two guys and how >> Oh, it was on Twitter. No, no, not on Twitter, but we we back when we had 350 followers a piece and and uh and and we met up on Twitter and it was kind of you and that was back when you could actually keep up with what people were saying, >> right? You you could answer your you could answer uh your you know, when people came in and asked a question, you could actually answer them because we didn't have a big following. Now it's it's unmanageable.

[00:01:17]>> Totally. and I can't control myself, so I do answer and it wastes my time.

[00:01:21]>> And I I'm sure people appreciate it. I don't mean to be arrogant, but it just I burn a lot of clock answering.

[00:01:28]>> I mean, some of what we we talked about back in the day was what was going on when Trump got into office in 2017. you could see the censorship regime start to to come into being and there was a lot of propaganda and r people forget Russia did so long ago but you know in Trump one there was a concerted effort to frame the guy and create uh what's called wrap up smears they would uh use anonymous sources uh to say something about him and then that would get you know they'd put it out on Yahoo Finance and NBC News would pick it up and it was this it was coordinated uh black you know uh blackmail mail in in in the public and create this like fictit fictitious Russia Russia thing. There was clearly, it'll be shown eventually, and I think that Kelsey Gabbert's working on it, that Obama and Biden and and uh uh Brennan conspired to uh do a coup in 2016, 17, 18 that that and so that's when the that's when things became really apparent to me that things were going off the rails. And of course earlier than that I thought ISIS was a uh creation of the CIA and the MSADA.

[00:02:40]And that turns out to have been true.

[00:02:41]ISIS was, you know, always >> and the mass shootings. The mass shootings head to toe. I don't think there's a mass shooting. I don't think there's a single one that's legit. I I just don't think they're just single crazy guys. I I don't believe a single one. There might be one you say, "Okay, that one. Okay. But I think every one of them is some guy who's had his brains jammed into his skull and stirred around by some intelligence agency and then he this guy who attacked the White House dinner. Uh the why I mean the guy had no record had nothing there was nothing to explain why he did that.

[00:03:16]>> Oh they always seem to be on SSRI and other other uh mindaltering drugs. You know, um, what was interesting to me about the latest assassination attempts >> was not the, you know, whether it's fake, real, doesn't matter. What what I found interesting is most of the people who heard about it didn't even did not investigate it and just assumed it was fake. So, they have a problem now. The magic trick isn't working. People gave it zero energy, zero time. They didn't even like get on, you know, try to figure out if it was. They just assumed it was and moved on. So that means the nodes out there that they're trying to, you know, they do these events to create an emotional response. If you can't get an emotional response, you have to up your game. You and that means more bodies, bigger events. So I fear that uh these they have to up the game. Uh these these little these little tickytacky things don't work anymore.

[00:04:14]>> Yeah. Like like Butler was Butler I thought was a legitimate attempt to shoot Trump. I'm not so sure now. I'm I'm I've backed away from that. Not that I have real hard data, but actually there's some footage that showed up which showed Secret Service moving cameramen around and I go, "Wait a minute. Not good." Um the the Ryan Ruth story was absurd. They called that an attempted assassination and and that story just just had nothing that made sense. So that was Vegas shooting quality absurd.

[00:04:45]>> Was that was that the guy off the golf course who uh >> Yeah. and and he he was a hero in Maui, which you might even know him. And then he was a and then he was recruiting people for Ukraine war and and there were just there were just so many subplots to his life. He's married to a supermodel with 80 bucks in the bank, >> you know, ju just just crazy crazy And so uh so that was some sort of scop.

[00:05:10]Um it I have reached the point now where it really feels like the Matrix. It feels like just everything. In fact, I I realize there is no country in the history of the world who hasn't lied their asses off to optimize the narrative for their cause, right? It's never been recorded.

[00:05:26]No. No country says, "Okay, we screwed up." You know, they just don't do it.

[00:05:31]And and as a consequence, you can't believe anything at face value. You just And that's where we're fried at this point.

[00:05:38]>> Yeah. And you know, it's interesting.

[00:05:40]More and more people are checking out and don't care. Um and AI has introduced a whole other uh problem like you know look you you and I are both active X members. I rarely retweet stuff. I I have to take if I see a post I have to like put it in Grock because is it a true news story? Is it a true video?

[00:05:59]What was the you know and even then you have to ask was the video put out today or you like because because sometimes people recycle stuff from a year ago as if it's new. So there's so many traps and you know Brett Weinstein talks about this. He calls it the Cartisian crisis, meaning no one knows what to believe anymore. And that's where we are.

[00:06:17]>> So, you've sat down with Brett. I've had exchanges with Brett, not lengthy ones.

[00:06:22]You've been with him. I I think if you got Brett shitfaced, he would really go dark.

[00:06:29]I I I think we're seeing I think he's I think he's showing flipping his hand at the audience, but he's not going full Monty. Well, so Brett and I uh you know, I have a standing invitation to go hang out with him at his his house whenever I get time or he gets time and we said we'll put the phones in the microwave and we'll tell each other what we really believe is going on that we can't share because it might delegitimize us because some of the stuff is the Overton window is not there yet ahead, >> right? I agree. Um let's talk markets since speaking of fraud. Um I I I have uh I have this thing I've been thinking about where where where uh if you take if you take AI and you someone did this experiment I think it was Charles Hugh Smith you give it he hand wrote the the 10 digits 0 to 9 and then put it into recursively repeatedly into AI and what he noticed is they degenerated and they became identical and So it was a way of showing that when you take AI and feed it into more AI and feed it into more AI, you get slop, right? The term slop.

[00:07:41]>> Yeah.

[00:07:41]>> Um what are markets? Markets are computers putting out output which is then being put into the new computers putting out new output. And so yeah you I read a Zero Hedge article on gamma squeeze, right? Then I I did some digging this morning more on gamma and delta and all these different things.

[00:08:00]It's just slop. It it's just it's just garbage. And so so what does that do?

[00:08:05]Well, besides and I've been paying very close attention to Mike Green and I underestimated him. He really does have a deep understanding of of what passive investing is doing and he would join us in the we are headed somehow for a catastrophic amount of erosion of price.

[00:08:25]>> Correct.

[00:08:26]>> And it's guaranteed to occur. It's just not guaranteed when. So a little history on the market structure when I was in the game at Black Rockck. You know I first of all I was an analyst on the on the buy side uh starting in 99 and tech analyst and I went to Black Rockck around 2002 which was State Street Investment Management Black Rockck bought them and I inherited a $2 billion growth portfolio that we grew to 14.

[00:08:52]Back then the marginal uh uh buyer and seller of stocks was a fundamental investor.

[00:09:00]>> Then the passive trend started to take off and Larry Frink abandoned fundamental investing and acquired his way to passive. He acquired Maryland asset management then Barkclays and Barclays is you know eyesshares which is the biggest and then he's grown that to six seven trillion dollars. So passives have and then there was a considered effort to get all the uh you know financial analysts to stop buying mutual funds and to buy just ETFs and create their own little portfolio of ETFs and um and then the 401ks ETFs. So the fast forward I was talking to a quant friend of mine fundamental investors are 5% of the volume.

[00:09:44]>> There's price discovery for you. There's price discovery. So that that's why in the old days, you know, if a company was starting to have bad fundamentals, smart analysts would start to figure that out by talking to management, hearing tone change, and the stock would start to discount uh that into the events. Now, that's why we get these the stock goes up up then there's bad news and it goes down 20%. Because it there there's no fundamental investor to frighten on that anymore. So that that's number one.

[00:10:14]Number two, retail currently is 30% of the volume retail and they're all speculating >> of the total volume of the total volume >> of the total volume are speculating on one day options. So we got we got we got we got punters 30% of the volume is punters the rest is passes people that do actual work is five.

[00:10:35]>> That's so amazing. Here's an anecdote. I I button hold Jack Bogle one day and I said, "Jack, um, passive investing has eliminated the big swinging dick money managers who would walk in a corporate CEO's office and say, "Get your together. We're selling." And and I said, "As a consequence, there are no adults there's no adult supervision in the markets." And he agreed.

[00:11:02]>> That was Jack Mogul. That was Jackal.

[00:11:05]>> Correct. So corporations are no no longer sensitive to what they used to be sensitive to which was fundamentals, >> right?

[00:11:13]>> So So what they do and we're when when when the great wash out comes, we're going to find because they know there's passive investing and there's also there's momentum and all they care about is beating and raising earnings.

[00:11:29]And since and since that's the headline number and the algos drive the stock in the old days people would look into the numbers and say hey that was a bogus beat cash flows going here there um so they are not they're rewarded for accounting fraud and we're going to come to find that something and I've heard this speculated upon by uh people who look at financial accounting we're going to see massive earnings revisions when this when the tide goes out there's going to be probably 25% of the S&P 500 that's been doing multiple years of accounting process.