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Automatic and cheap balancing. Its a great business for coinbase: if it had plenty of investors, then they have a very definite measure on what to ask coin mak

Automatic and cheap balancing. Its a great business for coinbase: if it had plenty of investors, then they have a very definite measure on what to ask coin makers before putting their coin on their exchange. Figure they can ask 10% of the outstanding tokens in exchange for the legitimacy that will pump the coin sky high.

JumpCrisscross 9y ago
> Automatic and cheap balancing For someone unknown definition of “balancing.” (Rebalancing and re-weighting or re-constituting are different things.)
- Klathmon 9y ago
  It's only "unknown" if you refuse to read. https://am.coinbase.com/documents/cbi-methodology.pdf https://am.coinbase.com/documents/cbi-methodology.pdf Edit: sorry, this came across more aggressive than I meant for it to be!
  - deleted 9y ago
    [deleted]
  - JumpCrisscross 9y ago
    Pardon me, the construction is as transparent as something like this can be, i.e. generally, whatever their committee feels like. My qualm is with the word “balancing” which implies diversification as this term is used within portfolio theory. You can’t balance a book of correlated assets. (You can track them, which this index tries to do.)
    - dmurray 9y ago
      Rebalancing is the correct term of art here. The index reweights, the fund rebalances its holdings in order to track the new reweighted index. Source: traded a lot of index funds. Also, based on the blog post, the fund (or the index managers, who are the same people here) would say they are rebalancing in your sense of the word too. They are adding diversification compared to a portfolio that just holds, say, bitcoin. Sure, it's not as diverse as one that also holds stocks and bonds and real estate, but nobody's perfect.
- conanbatt 9y ago
  They put the guidelines of what they consider balancing.
DennisP 9y ago
Since it's marketcap weighted, rebalancing is minimal; the only variance comes from the slightly different issuance rates.

JumpCrisscross 9y ago

> Automatic and cheap balancing For someone unknown definition of “balancing.” (Rebalancing and re-weighting or re-constituting are different things.)

Klathmon 9y ago
It's only "unknown" if you refuse to read. https://am.coinbase.com/documents/cbi-methodology.pdf https://am.coinbase.com/documents/cbi-methodology.pdf Edit: sorry, this came across more aggressive than I meant for it to be!
- deleted 9y ago
  [deleted]
- JumpCrisscross 9y ago
  Pardon me, the construction is as transparent as something like this can be, i.e. generally, whatever their committee feels like. My qualm is with the word “balancing” which implies diversification as this term is used within portfolio theory. You can’t balance a book of correlated assets. (You can track them, which this index tries to do.)
  - dmurray 9y ago
    Rebalancing is the correct term of art here. The index reweights, the fund rebalances its holdings in order to track the new reweighted index. Source: traded a lot of index funds. Also, based on the blog post, the fund (or the index managers, who are the same people here) would say they are rebalancing in your sense of the word too. They are adding diversification compared to a portfolio that just holds, say, bitcoin. Sure, it's not as diverse as one that also holds stocks and bonds and real estate, but nobody's perfect.
conanbatt 9y ago
They put the guidelines of what they consider balancing.

DennisP 9y ago

Since it's marketcap weighted, rebalancing is minimal; the only variance comes from the slightly different issuance rates.