Re:Vanguard Is Growing Faster Than Everybody Else Combined
by mherdeg on Wednesday April 19, 2017 @11:33AM
(#14148434)
I've been meaning to read this essay which I believe argues that with index funds so big, prices are determined by the remaining investors who think they know better than the market -- which in theory should mean that the market gets even better information than it has now and determines prices even more accurately: http://www.philosophicaleconomics.com/2016/05/passive/
I'm not 100% sure I understand the argument or have presented it correctly. It's reassuring.
The other takeaway here is that if you have a theory that ETFs are going to become increasingly popular, you could "test" that theory by investing directly in companies with run ETFs.
For example you could buy some NYSE:STT or NYST:BLK and that might help you invest in "people pay a premium for the liquidity and other benefits of ETFs". Of course, you'd want to believe that that theory will outperform the S&P 500 :)
I'm not 100% sure I understand the argument or have presented it correctly. It's reassuring.
The other takeaway here is that if you have a theory that ETFs are going to become increasingly popular, you could "test" that theory by investing directly in companies with run ETFs.
For example you could buy some NYSE:STT or NYST:BLK and that might help you invest in "people pay a premium for the liquidity and other benefits of ETFs". Of course, you'd want to believe that that theory will outperform the S&P 500 :)