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Who would that investor trade with?
by OscarCunningham 10y ago
Who would that investor trade with?
- icebraining 10y agoI'm not an expert, but index funds still purchase the stocks, so when the active investor bought a stock at an increased price, it would increase the market cap and so the index fund would buy some more of it from them.
- OscarCunningham 10y agoNah, because the value of the stock that the index fund already owned would also increase in the same proportion.
- icebraining 10y agoFair enough, for stocks the index already owned, but what about for the others? If the investor took a stock that wasn't in the top 500 and inflated its value above the 500th stock, wouldn't an S&P 500 index fund then buy it?
- n72 10y agoIt's a thought experiment.