41–50 of 85 posts
Earlier quoted context omitted.
What kind of ROI do they get doing this? Better than 5%?
The article cites American Airlines jumping 11% in the 4 days before it was added to the S&P 500.
This does not answer the question about ROI.
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…
It's a nice, clear example of the anti-inductivity of the market: http://lesswrong.com/lw/yv/markets_are_antiinductive/ 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…
I would like to know how.
Even in the worst case -- Vanguard doesn't lose anywhere near this premium -- we're talking 20-30 bps, or .25%. It's one of those scenarios where one has to choose what is less bad. Sure, an active manager could play with the index a bit more to help avoid this, but you'd be paying a lot more than .25% for his effort. It might, however, be a good enough reason to side-step this issue and use Total Stock Market (VTSMX…
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…
It's a nice, clear example of the anti-inductivity of the market: http://lesswrong.com/lw/yv/markets_are_antiinductive/ 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…
Sure some people get rich, but for buy and hold investors it's mostly a non-issue. The expense ratio of an S&P 500 index is still very small. A total market fund won't have the same front running issues and the expense ratios on those can actually be higher than the S&P 500 index funds. IOW the overhead here is in the noise IMO.
0.2% waste is huge compared to the overhead fee of an index fund. VTSMX fee is 0.17%.
> higher than
You mean "lower than"
https://firstlook.org/theintercept/2015/05/07/congress-argue...
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…
It's a nice, clear example of the anti-inductivity of the market: http://lesswrong.com/lw/yv/markets_are_antiinductive/ 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…
Presumably they'd leave a little money on the table because they'd have to guess how much to buy in or sell out, but it'd probably mitigate a good chunk of the loss, right?
Even in the worst case -- Vanguard doesn't lose anywhere near this premium -- we're talking 20-30 bps, or .25%. It's one of those scenarios where one has to choose what is less bad. Sure, an active manager could play with the index a bit more to help avoid this, but you'd be paying a lot more than .25% for his effort. It might, however, be a good enough reason to side-step this issue and use Total Stock Market (VTSMX…
Earlier quoted context omitted.
I'd be more interested in a "Index Frontrunning Frontrunning" index, actually.
No no no, you're behind the times. Index triple frontrunning is what's hot.