Which form of financial engineering would you ban, and why stock buybacks?
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I'm mostly trolling, but the theory is that because index funds own competing companies, they create perverse incentives for shareholders where they benefit from industry-wide price hikes instead of price competition
The classic example for this theory is airlines. If ilmy index fund owns both Delta and United, I as a shareholder benefit from both airlines raising prices together and becoming more profitable in the aggregate instead of actually competing
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And anyway, the most provocative endpoint of this theory is that we should ban index funds because they are an antitrust issue. It's such a funny theory/hot take that it's kind of become a finance meme,
@matt_levine writes about it on practically a weekly basis in money stuff -
Here's a classic example: https://www.bloomberg.com/opinion/articles/2019-11-12/if-you-own-everything-why-merge …
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