2 ms·

can you explain the index funds line

• nuclearnice3 4y ago
  I think the notion is the index fund is simply buying a stock because it has a certain market cap. It is not evaluating the fundamentals of the company. The algorithmic art is similar in the sense that it is an averaging of previous effort. People made art and it was fed into the algorithm. The algorithm is some weighting of the art it was fed. Analogously, people who thought about companies bought and sold the stock. It landed at some price. The index fund just followed that. There has been criticism of index funds [1] and defense [2] as far as price discovery. Other people have raised the possibility that an index fund holding large amounts of competitor companies is an antitrust issue. [3] [1] https://www.ft.com/content/87a3b117-7085-40f4-8cca-66bb8353c971 https://www.ft.com/content/87a3b117-7085-40f4-8cca-66bb8353c... [2] https://www.blackrock.com/corporate/literature/whitepaper/policy-spotlight-index-investing-supports-price-discovery-april-2019.pdf https://www.blackrock.com/corporate/literature/whitepaper/po... [3] https://corpgov.law.harvard.edu/2018/12/04/why-common-ownership-is-not-an-antitrust-problem/ https://corpgov.law.harvard.edu/2018/12/04/why-common-owners...