GM101: When Passive Breaks the Market ft. Hari Krishnan & Cem Karsan

Hari Krishnan joins Niels and Cem for a deep exploration of what happens when markets become dominated by flows rather than fundamentals. Drawing on his new paper with Mike Green and Stefan Sturm, Hari explains why rising passive ownership may weaken price discovery, amplify concentration in mega-cap stocks and create conditions for reflexive instability. The conversation expands far beyond indexing, touching on volatility targeting, leverage, dispersion, inflation, government intervention and the growing dependence of the global economy on rising asset prices. Along the way, Cem and Hari debate whether policymakers can continue stabilizing an increasingly fragile system, what could trigger a structural break, and how investors should think about positioning in a world where flows may matter more than fundamentals. ----- 50 YEARS OF TREND FOLLOWING BOOK AND BEHIND-THE-SCENES VIDEO FOR ACCREDITED INVESTORS - CLICK HERE ----- Follow Niels on Twitter , LinkedIn , YouTube or via the TTU website . IT’s TRUE ? – most CIO’s read 50+ books each year – get your FREE copy of the Ultimate Guide to the Best Investment Books ever written here . And you can get a free copy of my latest book “ Ten Reasons to Add Trend Following to Your Portfolio ” here . Learn more about the Trend Barometer here . Send your questions to info@toptradersunplugged.com And please share this episode with a like-minded friend and leave an honest Rating & Review on iTunes or Spotify so more people can discover the podcast. Follow Cem on Twitter . Follow Hari on LinkedIn. Episode TimeStamps: 00:00 - Hari warns about a fragile financial system dependent on a handful of decision-makers 01:06 - Niels introduces Hari’s new paper with Mike Green and Stefan Sturm 03:00 - Why passive investing may weaken the link between fundamentals and prices 08:40 - The key assumptions behind the model 12:49 - How passive adoption accelerated structural market changes 15:11 - Cem explains why markets may now drive the economy rather than reflect it 23:38 - Can policymakers control a complex financial system? 27:03 - How passive flows amplify mega-cap concentration 31:22 - The changing role of dispersion, volatility and positioning 41:04 - What the model suggests about instability at high passive ownership levels 46:21 - Why 2022 may have been a warning sign 51:55 - Inflation, government intervention and the limits of market control 55:33 - What could trigger a systemic break? 01:07:28 - Political and demographic pressures beneath the system 01:10:43 - Hari’s portfolio implications: stay long, hedge smartly and own inflation sensitivity Copyright © 2025 – CMC AG – All Rights Reserved ---- PLUS: Whenever you're ready... here are 3 ways I can help you in your investment Journey: 1. eBooks that cover key topics that you need to know about In my eBooks, I put together some key discoveries and things I have learnt during the more than 3 decades I have worked in the Trend Following industry, which I hope you will find useful. Click Here 2. Daily Trend Barometer and Market Score One of the things I’m really proud of, is the fact that I have managed to published the Trend Barometer and Market Score each day for more than a decade...as these tools are really good at describing the environment for trend following managers as well as giving insights into the general positioning of a trend following strategy! Click Here 3. Other Resources that can help you And if you are hungry for more useful resources from the trend following world...check out some precious resources that I have found over the years to be really valuable. Click Here Privacy Policy Disclaimer

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GM101: When Passive Breaks the Market ft. Hari Krishnan & Cem Karsan is an episode from Top Traders Unplugged with Niels Kaastrup-Larsen | Engaging Conversations with the Top Traders & Investors by Niels Kaastrup-Larsen.

This episode is 01:13:52 long.

This episode was published on May 20, 2026.

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