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That's not abuse, that's a valuable price discovery mechanism. If the whole market was passive there would be no way to determine the true price of an asset.
by infinite8s 9y ago
That's not abuse, that's a valuable price discovery mechanism. If the whole market was passive there would be no way to determine the true price of an asset.
- tysonzni 9y agoThe universe of passive funds or ETFs includes those that track specific industry/sector, size, region and other factors. Even if the whole market is passive, traders could still vote on the valuation of an asset by buying/selling those funds. If everyone is passive, price discovery would be harder but not impossible. But there will always be traders who think they can gain an edge by going active, right?
- infinite8s 9y agoThat edge is what drives price discovery.