11–20 of 85 posts
This is basically the primary trading strategy employed in the The Ugly Americans . The time period covered is mid 1990's https://en.wikipedia.org/wiki/Ugly_Americans:_The_True_Story...
And then of course the value and the cost of high quality information delivered to you in a timely manner is a bit different than staring on CNBC screens.
The Fed report found that there is no long term impact of being chosen to be on an index.
I expected to see (1995) tagged to the end of this article. I personally know 3 people who run their own money ( Having said that, this isn't exactly easy. You need to know 1) if a stock is going into the index 2) when its going into the index 3) how much the index will buy 4) how much the index buy will affect the price of the stock the first 3 are trivial for some index funds, though most have rules that allow them…
The very act of noticing that something is a good strategy, and beginning to trade on it, will over time drain away the utility of the strategy, until it is useless or worse than useless.
Tracking indexes is "big", and has some brute simplicity about it, but eventually the market will eliminate that as a viable investment mechanism. (But that won't stop your metaphorical Dad from swearing up and down you need to buy index funds....)
I expected to see (1995) tagged to the end of this article. I personally know 3 people who run their own money ( Having said that, this isn't exactly easy. You need to know 1) if a stock is going into the index 2) when its going into the index 3) how much the index will buy 4) how much the index buy will affect the price of the stock the first 3 are trivial for some index funds, though most have rules that allow them…
And sometimes a stock might be entering an index but leaving another (e.g., moving from Russell 2000 to Russell 1000), so the net result might be opposite to what you'd naively expect.
So yes, it is possible to make money doing this, but it's not a sure thing.
How is this considered unethical? If you know X will buy loads of shares of an equity and you learned that fact legally through (presumably) public channels, are you A) a scoundrel, or B) smart, for buying shares before X buys those shares? When somebody does something out of the ordinary it's necessarily considered a "game" (read "scam") by the majority establishment. The reality is that the index is buying the stoc…
That's not how all indexes work. The FTSE100, for example, is simply the 100 largest companies on the LSE by market cap[0].
And many indexes (DFA being an exception that I'm aware of[1]) weight companies by their market cap, so the rebalancing trades made by index funds aren't based on value so much as an algorithm.
Is there a "Index Frontrunning" fund which I can invest in? (The fund would automatically frontrun all index changes, and so keep management fees to a minimum.)
I expected to see (1995) tagged to the end of this article. I personally know 3 people who run their own money ( Having said that, this isn't exactly easy. You need to know 1) if a stock is going into the index 2) when its going into the index 3) how much the index will buy 4) how much the index buy will affect the price of the stock the first 3 are trivial for some index funds, though most have rules that allow them…