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>Index funds bother me in the same way as in at some point the price discovery mechanism ought to break as everyone just uses one corpus. I'm not sure what you
by IAmGraydon 4y ago
>Index funds bother me in the same way as in at some point the price discovery mechanism ought to break as everyone just uses one corpus.
I'm not sure what you mean here. Are you saying that index funds are driving individual equities? If so, why do you think that? Because of broad market correlation?
- icambron 4y agoThe idea here is that if everyone is just holding index funds that follow the market, no one is responding to external signals to drive prices to any particular value. Index funds follow the market, but what does the market follow if all the equities are held by index funds? It’s a great metaphor for what could happen if there’s no new art coming from outside the model; everything get stuck (though I’m not sure I agree, tbh, humans are just pattern-matching robots too and it seems to have worked ok)