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But the wisdom of the crowd, the price signal, only works if professionals look at the stocks. And it requires only a few [hundred] of them (with big enough lev
by pas 7y ago
But the wisdom of the crowd, the price signal, only works if professionals look at the stocks. And it requires only a few [hundred] of them (with big enough leverage, so their position shows up).
For the top 500 stocks there are enough people (and algos) going over every bit released by the corresponding companies.
- repolfx 7y agoThat's a contradiction. It's not the wisdom of the crowds if only a few hundred people are really looking at things. The whole point of that expression is that you need a crowd, to avoid groupthink, capture etc
- pas 7y agoNot really, because passive funds just piggy-back on the price finding results of the market. And the active market is very sensitive. Especially if someone is so confident that they are willing to use drastically leveraged positions.