How Competitive is the Stock Market? Theory, Evidence from Portfolios, and Implications for the Rise of Passive Investing
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3821263
‘Magical' Efficient-Market Theory Rebuked In Era Of Passive Investing
https://finance.yahoo.com/news/magical-efficient-market-theory-rebuked-140045617.html
According to a study to be published in the prestigious American Economic Review, evidence is building that active managers are slow to scoop up stocks en masse when prices move away from their intrinsic worth. Thanks to this lethargic trading behavior and the relentless boom in benchmark-tracking index funds, the impact of each trade on prices gets amplified, explaining how sell orders, like on Monday perhaps, can induce broader equity gyrations.
As a result, the financial landscape is proving less dynamic and more volatile in the era of Big Passive, according to authors at the UCLA Anderson School of Management, the Stockholm School of Economics and the University of Minnesota Carlson School of Management.
The Dominance of Passive Investing and Its Effect on Financial Markets
https://merage.uci.edu/news/2024/10/The-Dominance-of-Passive-Investing-and-Its-Effect-on-Financial-Markets.html
Related:
Shiller, Robert, J. 2003. "From Efficient Markets Theory to Behavioral Finance." Journal of Economic Perspectives, 17 (1): 83–104.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3821263
https://finance.yahoo.com/news/magical-efficient-market-theory-rebuked-140045617.html
According to a study to be published in the prestigious American Economic Review, evidence is building that active managers are slow to scoop up stocks en masse when prices move away from their intrinsic worth. Thanks to this lethargic trading behavior and the relentless boom in benchmark-tracking index funds, the impact of each trade on prices gets amplified, explaining how sell orders, like on Monday perhaps, can induce broader equity gyrations.
As a result, the financial landscape is proving less dynamic and more volatile in the era of Big Passive, according to authors at the UCLA Anderson School of Management, the Stockholm School of Economics and the University of Minnesota Carlson School of Management.
The Dominance of Passive Investing and Its Effect on Financial Markets
https://merage.uci.edu/news/2024/10/The-Dominance-of-Passive-Investing-and-Its-Effect-on-Financial-Markets.html
Shiller, Robert, J. 2003. "From Efficient Markets Theory to Behavioral Finance." Journal of Economic Perspectives, 17 (1): 83–104.