Slate Money: "Trillions"

Date: October 9, 2021
Host: Felix Salmon
Co-hosts: Emily Peck, Stacey Marie Ishmael
Guest: Robin Wigglesworth, Global Finance Correspondent at Financial Times and author of Trillions

Episode Overview

This episode dives into the past, present, and future of passive investing, inspired by Robin Wigglesworth’s new book Trillions. The hosts unpack the historical rise of index funds, their unprecedented dominance, and the generational psychology driving both passive and hyperactive investment approaches today. Other topics include the murky mechanics of stablecoins (especially Tether), the fractionalized art investment platform Masterworks, and the economics of markets as they face new challenges. The quartet rounds out the conversation with their signature “Numbers Round,” delivering insight and laughs on everything from energy prices to executive pay.

Key Discussion Points & Insights

1. The Passive Revolution: Why "Trillions"?

• Robin Wigglesworth introduces his book and the historical significance of index funds:

  “There’s a hedge fund manager TV show on Showtime called Billions, but if you’re an index fund, then you’re talking trillions... The biggest fund in the world is an index fund with over a trillion dollars.” (02:09)

• Felix jokes on the title and cultural cachet of passive investing:

  “A billion dollars isn’t cool. You know what’s cool? A trillion dollars.” (02:36)

• Robin explains the early days of index funds:

  “They were working at crappy institutions… but they realized most people actually do a really bad job beating the market. Well, how about we just join the market? And they invented the first index funds. They did something profoundly disruptive.” (03:37)

The Not-So-Boring Origins of Index Funds

• Indexing began as a sophisticated, even competitive investment approach.
• Computers enabled accurate market tracking at a time when active managers incurred huge costs with little advantage.
• Over time, public perception shifted to see index funds as "boring" and "average"—a misconception, argues Robin.
• Early adopters were large institutions (pension funds, etc.); now, it’s a mix of ordinary people and giant investors.

  “Overall, we're talking 25, $26 trillion probably now ... a big mix of ordinary people ... and big pension plans, insurance companies, private banks, sovereign wealth funds.” (06:30)

2. Is There Too Much Money in Index Funds?

Concerns & Criticisms:

• Emily asks about the possible downside:

  “Is there any downside to lots of money being put in these strategies?” (07:24)

• Robin’s view:

  “We take fundamentally good ideas and do them to death. ... But the broad attack from largely active managers... I find extremely unconvincing.” (07:35)

• Felix summarizes the classic critique:

  “If everyone indexes, then you won't have any price discovery and markets will fail.” (08:19)

• Robin counters:

  “Fund managers make more money than they ever have before ... Why should we cry or shed any tears for the fate of active managers, at least for the foreseeable future?” (08:25)

3. Generational Shifts: Rise of Active Day-Trading and Social Investing

• Emily: “If markets are so efficient, what's up with GameStop?” (09:21)
• Robin: “I'm not an efficient market zealot... Markets aggregate all the dumb and smart decisions of millions of people... Are markets efficient? No... But in the long run, does that change the fundamental issue that markets [are] really hard to beat for the vast majority of people? No, not really.” (09:28)
• The hosts discuss gamification, social investing (Reddit, Robinhood), and the cycle of gambling market behavior through the ages.
• Stacey draws a cultural parallel between investing, gaming, and sports betting:

  “The same people who are super into playing video games... are the same people who are really into certain elements of the crypto market... The underlying feelings and the underlying, I think, social and cultural reasons for engaging in this are very, very similar.” (15:31)

4. Tether and the Mystery of the Stablecoin Backing

• Discussion about Tether, the dominant but opaque "stablecoin" in crypto.
• Stacey explains:

  “Tether is what's known as a stablecoin... each coin... is backed either by an actual US dollar or an asset that is pretty fungible with a US dollar... But the mystery of Tether... is that it's actually very hard to track down where the $69 billion in assets that they say are backing each one of their stablecoins are at.” (17:12)

• The panel discusses the importance of Tether’s first-mover advantage and why it remains central despite clear transparency risks.

  Felix: “Tether has just become like the US dollar of the crypto space… because it’s where all the liquidity is, people are going to use Tether as their sort of resting heartbeat of crypto trading...” (25:00)

• Memorable quote from Brock Pierce (Tether co-founder):

  “I’m a doula for creation. I only take on missions impossible.” (29:28)

5. Fractional Art Investing & Masterworks

• Felix describes the rise of platforms like Masterworks, which let investors buy slices of paintings:

  “You can become a billionaire in the space of a couple of years just by chopping up paintings and selling them off in little bits.” (31:19)

• Emily raises skepticism:

  “If you're not laundering money with it, like, what is the point of Masterworks? Like, the fees are very large... if you're gonna invest in alternative assets, like, why would you go to Masterworks?” (33:46)

• Robin contextualizes the rise in "hail-mary assets":

  “People are just desperate for anything that might offer them a plausible return. And art, like high quality art, has actually done really well in the long run... You kind of left with Hail Mary assets. So that's like, you know, wine, art, crypto, property...” (35:16)

• Felix’s art market insight:

  “The value of expensive art is basically a function of how much money the ultra, ultra [wealthy]… are the people buying it.” (36:28)

Notable Quotes & Moments

• On index funds’ cultural reputation:

  • “You’re not the cool person at a party if you bring up that you’re a Boglehead.” – Robin Wigglesworth (16:47)

• On Tether:

  • “Tether has just become like the US dollar of the crypto space… because it’s where all the liquidity is.” – Felix Salmon (25:00)
  • “Is it basically like shadiness is the USP of Tether? Like, the shadiness is the point, as it were.” – Robin Wigglesworth (22:07)

• On generational investing:

  • “The same people who are super into playing video games, either competitively or communally...are the same people who are really into certain elements of the crypto market...” – Stacey Marie Ishmael (15:31)

• On art as an asset:

  • “Once you’re spending more than a certain amount of money on art, it stops being a consumption good...and starts becoming an actual asset that has resale value.” – Felix Salmon (31:34)
  • “It’s a bet on increasing inequality.” – Felix Salmon (36:28)

Important Timestamps

• [00:43] Robin introduces himself and Trillions
• [03:14] “What’s the plot of an index-fund movie?” – Conversation on the personalities behind the passive revolution
• [06:30] Passive assets today: “$25–$26 trillion probably now overall...it’s a big mix of ordinary people and institutions.” – Robin
• [09:21] “If markets are so efficient, what's up with GameStop?” – Active trading’s generational pendulum
• [17:12] “What is Tether and why is it in the news?” – Stablecoins explained
• [25:00] “Tether has just become like the US dollar of the crypto space… where all the liquidity is.” – Felix
• [31:19] Masterworks and the business of fractional art investing
• [36:28] Art market as “a bet on increasing inequality”
• [38:28 & on] Numbers Round: Oil prices, TikTok reaches 1B users, Indra Nooyi’s $31M, Passive funds hit $26T

Numbers Round: Highlights

• Stacey: “80” – First time since 2014 the price of WTI oil topped $80/barrel. (38:30)
• Felix: “1 billion” – TikTok’s monthly active users, outpacing most other platforms. (39:52)
• Emily: “$31.1 million” – Indra Nooyi’s 2017 compensation as PepsiCo CEO. (41:13)
• Robin: “$26 trillion” – Estimated total assets in passive index strategies worldwide; about twice U.S. GDP, a quarter of all global investment assets. (45:51)

Tone & Style

The discussion is lively, insightful, and often humorous, balancing skepticism with curiosity. Quotes above retain speakers’ individual tones. The hosts blend deep finance expertise with cultural observations and self-awareness about generational investing behaviors.

Summary Takeaways

This episode illustrates the immense—almost unfathomable—scale and impact of passive investing, not just as a financial tool but as a cultural phenomenon. As the landscape of investing changes, new “hail mary” assets like crypto, meme stocks, and even fractional art emerge, revealing deep faith (sometimes misplaced) in narratives, communities, and first-mover advantage. Throughout, the hosts critically assess hype versus substance, illuminating the social psychology underpinning financial fads—whether in Wall Street index funds or the frontiers of digital assets.

For further reading/interest:

• Robin Wigglesworth’s Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever
• Zeke Faux’s Bloomberg Businessweek article on Tether
• Julia Halperin’s earlier Slate Money episode on the art market (for the art-investing curious)