4 ms·

Literally everywhere for the past years I see the advice to invest in index funds - the only question I have is what happens when a critical mass of people do j

• markovbling 12y ago
  that's the paradox of the efficient market hypothesis - if everyone is a passive investor then who keeps the market efficient? (...which is a common counter-argument for the markets being efficient. The reasoning behind passive investment is that, net of fees, it's difficult to out-perform the market although of course, everyone can't outperform the market because everyone collectively IS the market)
  • j_lev 12y ago
    Companies themselves buy and sell their own stock when they believe it is under/overvalued. And there will always be people out there who believe they have an edge and can pick undervalued stocks. These days I think in reality most people who have been into indexing for a while give themselves a bit of play money to invest in something more speculative.
• thejteam 12y ago
  And just like engineering standards, the nice thing about stock indexes is that there are so many to choose from.