http://www.goodevalue.com/2007/11/the-effects-of-index-funds-on-the-market/ It may be cheap, but is it a Goode value? Sun, 16 Oct 2011 22:06:46 -0400 http://wordpress.org/?v=2.8 hourly 1 http://www.goodevalue.com/2007/11/the-effects-of-index-funds-on-the-market/comment-page-1/#comment-73 Davis Freeberg Sat, 03 Nov 2007 03:59:25 +0000 http://www.goodevalue.com/2007/11/02/the-effects-of-index-funds-on-the-market/#comment-73 I think it's a valid weakness for traditional index funds, but I also believe that the market is aware of it and has compensated already. For example, Powershares uses a different allocation formula with their ETFs, for some of the same reasons that you bring up above. I think that the biggest impact that indexing might have, would be to increase volatility on the stocks. I don't know what the data looks like, but you would have to imagine that reducing the float would have some kind of an impact on price stability. I think it’s a valid weakness for traditional index funds, but I also believe that the market is aware of it and has compensated already. For example, Powershares uses a different allocation formula with their ETFs, for some of the same reasons that you bring up above. I think that the biggest impact that indexing might have, would be to increase volatility on the stocks. I don’t know what the data looks like, but you would have to imagine that reducing the float would have some kind of an impact on price stability.

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