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The factor I think he missed: All those managers timing trades in their random way has a randomizing effect on the system overall. But I'm not an economist, a
by r0s 13y ago
The factor I think he missed: All those managers timing trades in their random way has a randomizing effect on the system overall.
But I'm not an economist, any ideas if or how that influence manifests?
- YokoZar 13y agoIn aggregate, it wouldn't much matter since randomness would cancel itself out. So broad index funds wouldn't see that volatility. At shorter scales, however, randomness like that would add volatility to individual stocks, so you'd see more random results for returns among small portfolios -- thus creating quite a few genuinely lucky fund managers.