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A comment on The Financial Industry Is Having Its Napster Moment.

Re:The Financial Industry Is Having Its Napster Moment by wodenokoto on Thursday April 07, 2016 @06:49PM (#11451321)
I read that it is fairly easy to guess which companies will move in and out of S&P 500 and similar indexes, and since a larger and larger part of the market now sits in passive funds it is easy to predict large movements in buy and sell around when these indexes are updated.

So that should definitely open up some opportunities to beat the passive funds.

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Re:The Financial Industry Is Having Its Napster Moment by HappyTypist on Thursday April 07, 2016 @07:15PM (#11451451)
Not really, the big index fund providers are smart and they even pre emptively buy companies likely to be added to the index, and they sometimes wait a bit before rebalancing to their index. This intentional randomness makes it very difficult to front run index funds.
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Re:The Financial Industry Is Having Its Napster Moment by SilasX on Thursday April 07, 2016 @07:57PM (#11451648)
Isn't that, itself, a species of active management?
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Re:The Financial Industry Is Having Its Napster Moment by arielweisberg on Thursday April 07, 2016 @08:18PM (#11451730)
It could be construed as such. Really it's all about execution strategy.

If your concern is that it's active you can always check to see how well the fund tracks the index. The reality is that they track the indexes so well that it doesn't matter. At least for total market or S&P 500 funds.

There are problematic indexes that don't seem to get tracked well by funds.

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Re:The Financial Industry Is Having Its Napster Moment by jgalt212 on Thursday April 07, 2016 @06:58PM (#11451376)
these index add/remove trades have been happening for as long as "program trading" now HFT has been a thing.

It's a significant subplot of the book, Ugly Americans

https://en.wikipedia.org/wiki/Ugly_Americans:_The_True_Story...

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Re:The Financial Industry Is Having Its Napster Moment by beejiu on Friday April 08, 2016 @03:35AM (#11453157)
If there was any opportunity to take advantage of large movements, it is likely somebody else is already doing it.
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Re:The Financial Industry Is Having Its Napster Moment by thibautx on Friday April 08, 2016 @04:31AM (#11453344)
Trading firms compete (and are paid to) to make the markets on these products. Any arbitrage opportunity is quickly eaten up.
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