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The interesting bit is that this isn't an equilibrium. If a well-managed stock will not sell better than a poorly managed stock (which is the case if everyone
by lsc 13y ago
The interesting bit is that this isn't an equilibrium.
If a well-managed stock will not sell better than a poorly managed stock (which is the case if everyone uses "whole market" low load index funds, which seem to be the best performers right now) then there is no longer any incentive for management to manage well.
Now, I'm not saying that you will make money by picking stocks; what little I have in the stock market is in a broad index fund, too. I'm just saying; this isn't a sustainable situation.
- thaumasiotes 13y ago> If a well-managed stock will not sell better than a poorly managed stock (which is the case if everyone uses "whole market" low load index funds, which seem to be the best performers right now) then there is no longer any incentive for management to manage well. Well, if you assume that a hundred percent of management's compensation is in the form of company stock, sure. I somehow doubt that's the case.
- lsc 13y agoeh, my point is that the more dollars that are invested 'blind' - the less the stock price will reflect anything actually done by the company.