Active and Passive Arguments

Abstract

Should we choose to make our investments actively or passively? The author proposes a structure for thinking about the arguments and counterarguments to this question, and enriches the discussion by exposing a middle ground between them. This requires distinguishing between general truths, opinions, and falsehoods. The articles starts with logic and reason, but develops arguments that include non-quantifiable emotions as well, arguments that are not often discussed explicitly by academics or practitioners. It is these emotional benefits that push us more strongly towards active, while logic and reason pull us towards passive. In the end, there is no “right” answer to the question. Our individual answers require self-insight on our needs and preferences, and a decision on how much to pay for the benefits we derive.