Each dollar of passive inflow into an index translates into an increase in market cap of roughly 5 to 20 (or higher) dollars because demand is inelastic—there is no dollar waiting at the exact current price, so the price must move before other participants sell shares; this multiplier varies by index (S&P 500 vs Mag 7 vs Russell) and can cross into triple digits for the most concentrated mega-cap stocks.

causalpending

Speaker

Mike Green

Evidence Quote

there is a multiplier effect because of the inelasticity of demand there. Which means that for every dollar that comes in, there isn't a dollar waiting in the wings at this exact price to immediately fill that demand.

Source

The Trillion Dollar Trap | Mike Green on Passive Investing's Fatal Design FlawExcess Returns
Created: 6/18/2026, 1:59:25 PM

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