Lots of wealthy people invest their capital and live off 2-3%, while the portfolio is expected to average 7-11%. They choose this distribution strategy because they are trying to avoid a worst case scenario where they run out of money. The median return from this strategy is that their portfolio grows substantially. This growth of their portfolios is causing a concentration of wealth in the hands of the rich.
Now anywhere that is a good place to park money is shooting up in value. This includes stocks, real estate, gold and crypto.
My model predicts that everything investible will go up in value much faster than inflation.
The passive investment argument doesn’t explain why crypto and real estate are increasing in value. Most passive investors are holding stock and bond indexes.
Neither model can explain why bonds have crashed in value. Both models predict that bonds should be rocketing up like everything else.