In this episode, I sit down with Mike Green—Chief Strategist at Simplify Asset Management and one of the most rigorous thinkers on market structure today.
We start with Mike's journey from Wharton to small-cap value, through Canyon Partners during 2008, to correctly predicting the XIV collapse in 2018, and eventually co-founding Simplify where the firm now manages $12 billion across 30 strategies.
From there, we dig into two slow-burning crises that most people are getting wrong: how passive investing is reshaping market mechanics in ways that can't be sustained, and how we've s...
In this episode, I sit down with Mike Green—Chief Strategist at Simplify Asset Management and one of the most rigorous thinkers on market structure today.
We start with Mike's journey from Wharton to small-cap value, through Canyon Partners during 2008, to correctly predicting the XIV collapse in 2018, and eventually co-founding Simplify where the firm now manages $12 billion across 30 strategies.
From there, we dig into two slow-burning crises that most people are getting wrong: how passive investing is reshaping market mechanics in ways that can't be sustained, and how we've systematically mismeasured economic precarity over the last 60 years.
These aren't separate stories—they're symptoms of the same problem: asking systems to do things they weren't designed to do.
You'll hear us cover:
ON PASSIVE INVESTING AND MARKET STRUCTURE:
- The critical flaw in Sharpe's 1991 "Arithmetic of Active Management": passive funds trade continuously as cash flows in and out, making them perpetually active systematic strategies
- How the Pension Protection Act of 2006 accidentally created a market where over 100% of marginal capital became "passive"—and why regulators couldn't act due to regulatory capture
- Over 50% passive by market cap in US equities, and the physics predict accelerating volatility
- Why contributions (tied to income) and withdrawals (tied to asset values) create an unstable dynamic
- The fundamental mistake: we changed markets from pricing capital to providing retirement security—incompatible objectives
- The seeds of its own destruction
ON AMERICA'S HIDDEN PRECARITY CRISIS:
- How Mike stumbled onto the poverty line calculation and "felt sick" when he understood what it meant
- The 1963 origin: families spent 1/3 of budgets on food, so HHS tripled the USDA minimum food budget to define poverty—then locked that number in place
- That same food budget now represents 5-7% of household expenditures, not 33%—making the poverty line meaningless
- The real number: for a family of four in Caldwell, NJ, the inflation-adjusted equivalent isn't $32K—it's $140K
- The "valley of death": benefit cliffs where earning more makes you functionally poorer
- Why childcare became the single largest budget item for young families—and what disappeared when informal support networks collapsed
- What we've forgotten: capitalism requires redistribution for system sustainability and provisioning the next generation
- The connection to markets: when we can't afford crashes because retirement security depends on asset values, we've painted ourselves into a corner
ON INTELLECTUAL HONESTY:
- Why taking time off with no risk on the table is essential for seeing systems clearly
- What Earl Thompson taught me at UCLA: don't trust the "intellectual cartel"
- Why Mike's analysis isn't left or right—it's about hard-coding numbers in 1963 and watching the world change around them
THE BOTTOM LINE:
Markets weren't designed to provide retirement security—they were designed to price capital. We've grafted a social insurance system onto a capital allocation mechanism, and both are breaking under the strain.
Mike's work matters because he's doing what few others will: following the math wherever it leads, even when it's uncomfortable. This conversation is about understanding the actual rules of the game—not the ones we wish existed, but the ones that actually govern outcomes.
If you want to understand why markets feel unstable and why economic anxiety persists despite "strong" headline numbers, this episode explains the mechanics.
Disclaimer: The content of "Treussard Talks" is for informational and educational purposes only and should not be considered financial advice. The views expressed are those of the host and guests and do not necessarily reflect the opinions of Treussard Capital Management or its affiliates. Listeners should consult with their own financial advisor before making any investment decisions. For full disclosures, visit treussard.com.
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