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Index funds basically delegate "price discovery" to the activity of other investors, and just assume that the market price is the right one. This works as long
by human20190310 7y ago
Index funds basically delegate "price discovery" to the activity of other investors, and just assume that the market price is the right one.
This works as long as there are enough non-index investors trying to outsmart the market by actively trading.
- loeg 7y agoAnd there will always be active traders setting prices, because it is profitable to do so.