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I'm 95% passive, but I think a place where active strategy was observed was with TSLA. actives knew it was on it's way to the index and piled on into it, once
by segmondy 6y ago
I'm 95% passive, but I think a place where active strategy was observed was with TSLA. actives knew it was on it's way to the index and piled on into it, once it got into index, it got bid up some more and then actives cashed out. passives didn't enjoy the ride up, but suffered the cost of the ride down.
- worker767424 6y agoThis is what "getting priced-in" looks like. There are strategies around buying shares of companies where their acquisition has been announced, but hasn't closed. Buying is basically a bet that everything goes smoothly.
- jdminhbg 6y agoThis is becoming less true as technology has made total market indexes easy and cheap. Instead of buying the S&P 500, I can buy VTI, so TSLA was in my portfolio before and after, to no real effect.
- freetime2 6y ago> passives didn't enjoy the ride up Passive investors who only invest in the S&P 500 didn't enjoy the ride up. But there are plenty of other indexes that people invest in passively that would have held TSLA prior to being added to the S&P 500. I own SCHB, for example, which tracks the Dow Jones U.S. Broad Stock Market index, and would have owned shares in TSLA long before it was added to the S&P 500.