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I don’t think this characterization is really fair. The private equity model requires a market to sell into when a bet pays off (so they can make another bet).
by ajzinsbwbs 6y ago
I don’t think this characterization is really fair. The private equity model requires a market to sell into when a bet pays off (so they can make another bet). Investors who just buy the index are helping to fund that.
By analogy, house flippers rely on a market for turnkey homes.
- lend000 6y agoPeople who buy IPO's, and to a lesser extent, pick stocks, help fund that, but buying the index simply rewards companies that made it into the index and makes it harder to devalue under-performers. As with any statistically large index, some of the companies in the index will be correctly boosted by your capital, while others will be incorrectly so. My point is not so much to decry index investing as evil as to point out the irony of index investors complaining about more productive forms of market participation.