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It doesn't really work like that. Total Stock Market index funds are fine investments, which hold around 4000 US stocks. And since they are usually market-cap w
by inyourtenement 11y ago
It doesn't really work like that. Total Stock Market index funds are fine investments, which hold around 4000 US stocks. And since they are usually market-cap weighted, your exposure to each small-cap stock is small, so pump and dump isn't a real concern.
- 3pt14159 11y agoYeah, you, and the people downvoting me, don't really understand what I'm saying. Imagine I start a company and I get my friends to buy up the shares of it on the stock market. Now imagine the market cap is $10m the day before it joins the Russell 5000. The next day a seperate company goes bankrupt and my company is now 1/100000 of the Russell 5000, which means that ETFs that track that index are now buying roughly 20% of my stock, which raises the price to $15m. Next my friends can slowly sell out for the amount that they pumped, but they will never trigger a mass sell off, because I always had a controlling stake from the beginning.