Strategist who said passive investing is ‘worse than Marxism’ says AI plays are only making the problem worse

Nils Pratley, a strategist known for his controversial views on passive investing, suggests that the rise of AI-driven investment strategies is exacerbating the issues he perceives with traditional passive funds. He argues that the herd mentality encouraged by AI in identifying popular stocks could lead to further market inefficiencies and concentration risks, mirroring his previous criticisms of passive investing's impact on fair market dynamics. The development arrives against a backdrop of shifting risk appetite, where investors are reassessing exposure to markets and weighing the second-order impact on adjacent sectors. Investors are watching the broader tape for follow-through. Live pricing was not available at the time of writing, but positioning data and order-book signals will shape the next session. Positioning across funds, options skew and credit spreads typically respond first; equity price action lags but tends to confirm the direction once volume returns. Readers should treat the immediate move as a sentiment proxy rather than a final verdict on fundamentals. For longer-horizon allocators the more important question is whether this changes the trajectory of cash flows, regulation or competitive dynamics. If it does, multiple compression or expansion follows; if it does not, the reaction fades within a few sessions and the prior trend reasserts itself. What to watch next: forthcoming earnings prints, central-bank guidance and any official commentary that either validates or pushes back on the market's interpretation. Reported by MarketWatch and contextualised by the Global Investing News desk under Mark Grundell.