Which form of financial engineering would you ban, and why stock buybacks?
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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
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
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Here's a classic example: https://www.bloomberg.com/opinion/articles/2019-11-12/if-you-own-everything-why-merge …
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All that being said though, I don't actually think we should ban index funds. I *do* however think it's a really bad thing that index fund managers are very regularly talking to corporate CEOs, because it's easy to imagine that being a mechanism for reducing competition
End of conversation
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