Gen. Joe Shaefer wrote yesterday on seekingalpha.com that “true passive investing cannot result from an index fund whose components are changed regularly.” Joe, who runs Stanford Wealth Management and writes a newsletter, explains:

“The committees that decide what stocks constitute their index change their minds regularly. This is not buy-and-hold investing. It is a buy and let someone else determine what you will own.”

He then wonders if buyers of supposedly passive funds know what they are getting into.Both Joe and I are stock pickers whose customers are active investors so we are singing from our own hymnal.

Volatility, which has triggered the recent market sell-off, is not the same thing as risk, although if you listen to enough pundits you might think they mean the same thing. When VIX goes into orbit, in theory, the smart money sells out. It didn’t happen last week because the reversed volatility ETNs, like XIV, were sold off massive by “weak hands”, Wall Street lingo for retail investors. Right now according to Morgan Stanley quant Christopher Metli, equity market inflows and a really cheap price for VIX gamma (forward traded-volatility) means that they are good value compared to current VIX—if those ignoring gamma, according to ProTrading Research, are right.

The SPDR S&P 500 ETF suffered $23.6 bn in outflows last week, an 11-year record in amount and a 10-yr record in percentages. This was about 8% of the fund’s total assets at the start of the week and means that position unwinding can lead to further selling this week from risk parity funds and commodity traders, to say nothing of exiles from bitcoin.

However, according to M&G‘s Eric Lonergan, the recent volatility spike was not triggered by news and therefore is less serious than the China devaluation rise in the summer of 2015 and the 2008 financial crisis. However, he warns that investors are all moving in lockstep which means asset prices move more than the fundamentals account for and it may take longer to clear the panic. Also using volatility as a proxy for risk, he writes, is a “recipe for pseudo-science and over-confidence” in tech and statistics.

And of course, volatility is not the same thing as risk, because the only risk investors care about is loss of their capital. Volatility may raise it.Note that because retail US customers often could not get hold of their brokers last week they may still have trades they want to make from the panic, which may show up as soon as Weds.

My mother-in-law died in a car crash on Valentine’s Day, so it’s a holiday we don’t celebrate. This week it will also be a make-or-break day for the US stock markets which will get new data on US consumer price inflation. It was the trigger for Wall Street crumbling so far this month. Two of our companies are reporting, not enough to turn Wednesday into a terrible Thursday coming a day earlier. We also will see a couple of our favorites go ex-dividend.

*Yesterday I got another mysterious stock tip from Russia, from a different writer, Marthena Maus, for a stock called PBYA, Probability Media Corp., which trades OTC. If you get this stuff from Putinland, remember: “there is no such thing as a free lunch.” You do not get stock tips by email from legitimate analysts with whom you haven’t a relationship. There is a footnote in Ms Maus’s plug saying it had been paid for by notes granted to Pickwisk Capital Partners LLC of White Plains NY, a licensed broker-dealer. Where is the SEC in this imbroglio?