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Old 04-11-2015, 07:48 PM   #81
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Originally Posted by NW-Bound View Post
First, please note the correction I made in the post that you reply to. That is, I strongly believe one cannot use the performance of active MFs to judge all active investors.

In an earlier post, I name several classes of active investors that are not active MFs: individual stock owners, hedge funds, pension funds, endownment funds, investment banks, sovereign funds, etc... How do they do? If they do well, where's that money coming from?



But, let me rephrase your statement to see if I understand it. You were saying that the active MFs who are losers somehow boost up the return of the market, enriching the indexers or even buy-holders even if the latter do not trade.

There have been many actions of the financial industry that have caused harm, meaning taking away from the market. It is easily seen how the market could be higher if there were no financial fiasco caused by CDO, CDS, and all that crap, resulting in huge amounts of government money to bail them out (and much went into their pockets as salaries and bonuses). These deleterious effects take away from the market, actually the whole economy, and hurt everybody, whether you trade actively or not. They cause the index to go down.

Now, I am trying to see how active traders or stock pickers do the reverse to the market, boosting it up so that even buy-holders can benefit. I cannot see how though. I can see how they enrich the MF managers and the stock exchanges, but not the non-traders.

So, how about the other "active investors" I described, the one who are not "loser active MFs"?

I will put out a guess.... based on nothing at all....

Your example is looking at the market as a closed loop... in other words, there are only say 100 investors.... and all 100 are in the market.... nobody comes in and nobody leaves.... that just isn't so...

During the last crash, many people left the market... or they cut their equity investment % down.... so they could be active, but lost out on the gain.... so a few active investors bid up the stock... remember, only a small % of people sell their stock.... so someone bids a stock up from $90 to $100... someone took that $10 gain out of the market... but everybody who owns that stock now has $10 more money then they did before the gain.... including all the passive investors... so one trade made everybody richer...


Now... here is a question that just popped into my brain.... how often does the market turn over in a year IOW, if you added up the price of all the shares sold in a day, how many days would it take to equal the whole value of the market
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Old 04-11-2015, 07:59 PM   #82
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I have to mull over your first statement.

About the question, in a typically trading day, a big and widely held stock like IBM or Intel has less than 1% (0.5-1%) of outstanding shares changing hand. So, if all stocks are like that, it is roughly about 1 year or less for a complete market ownership change-over.

For reference, Wellesley portfolio change-over is shown by Morningstar as 109%/yr. It used to be lower, around 30-40%, as I remember.

Holy cow! Compared to me, these guys are day traders. If I trade like that, I would be churning my entire investable assets each year, and I am certainly not doing that.
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Old 04-11-2015, 08:13 PM   #83
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Originally Posted by NW-Bound View Post
I have to mull over your first statement.

About the question, in a typically trading day, a big and widely held stock like IBM or Intel has less than 1% (0.5-1%) of outstanding shares changing hand. So, if all stocks are like that, it is roughly about 1 year or less for a complete market ownership change-over.

For reference, Wellesley portfolio change-over is shown by Morningstar as 109%/yr. It used to be lower, around 30-40%, as I remember.

Holy cow! Compared to me, these guys are day traders. If I trade like that, I would be churning my entire investable assets each year, and I am certainly not doing that.

Yea, most of the shares sold in a day are program trading, trying to get a penny or so out of each share.... throw in all the day traders and I bet it is a big majority of the market... I am sure that the volume of 'real' investors would be much less.... heck, maybe a complete turnover in 3 to 5 years.... (again, just a WAG...)....
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Old 04-11-2015, 08:28 PM   #84
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I don't get Running Man's $320k zero... if $320k grows to $1 million over 10 years that is a 12.1% annual rate of return.... let me know where I can buy that zero and I'll jump all over it.

I think he must've activated the time machine and gone back to 1982.


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