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Think of when George Soros broke The Bank of England for an example of the type of trade. There is a lot of demand for S&P 500 index , but that demand isn’t ex
by rblatz 2y ago
Think of when George Soros broke The Bank of England for an example of the type of trade.
There is a lot of demand for S&P 500 index , but that demand isn’t exactly tied to the fundamentals of the index, and the price isn’t tied to value of the underlying companies, it’s tied to demand of people looking to save money for retirement or a place to store a nest egg. This is an opportunity for price discovery to get things wrong and eventually the market should correct that.
https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp https://www.investopedia.com/ask/answers/08/george-soros-ban...
- twoodfin 2y agoI don’t get it. Soros was able to break the pound because the UK government was committed to maintaining an artificial price. That’s nothing like an ETF or mutual fund of the S&P 500, which probably has one of the most efficient (relative to the capital involved) market price discovery mechanisms in history.