Re:Why Index Funds Are Like Subprime CDOs
by vkou on Wednesday September 04, 2019 @01:27PM
(#20879409)
Or, if the fund managers that survive aren't smarter - but are luckier than the ones being replaced by indices, the intelligence of the market will remain static.
Anyone can go all-in on red five times at the roulette table. One out of every 33 players will see 3100% returns from this investment 'strategy'!
That's assuming that the mutual fund managers who are being moved away from are all contributing their own unique information to the market, as opposed to repeating textbook business analysis techniques. If the fund managers that survive are smarter than the ones being replaced by indices, the intelligence of the market will improve.