Michael Green, Chief Strategist and Portfolio Manager for Simplify Asset Management, joins Julia La Roche on episode 366 to break down what he calls the most important and overlooked structural shift in financial history — the rise of passive investing. Green argues that the market isn't broken in the way most people think: it's not fraud or irrational exuberance, it's the mechanical consequence of a regulatory change in 2006 that turned 401k contributions into an automatic, valuation-blind buying machine. With passive now at 55% of the market — and rising 4% per year — Green shares new research showing that somewhere between 65% and 80%, a 1987-style crash stops being a possibility and becomes nearly inevitable. He also connects the dots between our retirement system, the housing crisis, and why both boomers and millennials are scared — just for completely different reasons.

Links:

Follow Mike on X: https://twitter.com/profplum99Read

Mike’s Substack: https://www.yesigiveafig.com/Visit Simplify: https://www.simplify.us/

Timestamps

00:00 Intro and welcome Mike Green

1:04 - What "broken markets" actually means today

2:40 - The Costanza market and how Mike's research began

6:21 - Passive went from 2% to 55% of the market since 1992

7:05 - Why passive investing is just momentum with no valuation filter

9:45 - The 2006 Pension Protection Act — the legislation nobody talks about

10:13 - Why Vanguard and Bogle aren't the ones to blame

10:19 - The book: The Greatest Story Ever Sold

10:39 - The academic paper that forced Mike to rewrite the book

13:59 - Type A vs Type B savers — and the snow cone moment

14:35 - Prices don't move because of information. They move because of flows.

15:08 - The threshold: 65–80% passive and the market becomes unstable

16:07 - Why the coming crash could be worse than 1987

19:37 - The XIV collapse — and what it taught Mike about predicting crashes

22:00 - Is there a disconnect between markets and the economy right now?

22:19 - Nvidia's margins, vendor financing, and the Cisco parallel

24:10 - The S&P could be worth less than 2,000 on a pure DCF basis

25:29 - Pushing back on the "we've never been better off" narrative

27:21 - The valley of death and the precarity line

28:36 - Why demographics are at the center of everything

29:29 - Why boomers are terrified too — and why that matters for younger people

31:14 - The housing trap: boomers won't sell, millennials can't buy

34:21 - What does all this say about the social fabric?

35:18 - "Tax wealth, not work" — the tax code we had in the 1950s

36:41 - Why a wealth tax is actually the wrong solution

38:11 - Wrap up