Re:Why Index Funds Are Like Subprime CDOs
by Terr_ on Wednesday September 04, 2019 @09:19PM
(#20883030)
"What if everyone became a passive investor" is like worrying "What if the entire ecology became defenseless herbivores?"
It just won't happen, because there's a negative feedback loop against it, leading to a kind of homeostasis.
> At some point, no one is left to figure out which cookies are tasty vs meh, so the price of all cookies converge to a single price.
Five minutes later someone says: "Holy shit, I can make a ton of money by buying loads of cookies, sorting them, and re-selling them -- except with the definitely-tasty ones at a higher price."
It just won't happen, because there's a negative feedback loop against it, leading to a kind of homeostasis.
> At some point, no one is left to figure out which cookies are tasty vs meh, so the price of all cookies converge to a single price.
Five minutes later someone says: "Holy shit, I can make a ton of money by buying loads of cookies, sorting them, and re-selling them -- except with the definitely-tasty ones at a higher price."