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Stephen Bosch's avatar

Yet more evidence that any predictable market behaviour will soon return to equilibrium. Just like physics!

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Pip McIntyre's avatar

Yup, there are always takers for free money and these companies are able to be first in the queue.

This part of the market has become more efficient.

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Vaibhav's avatar

I do not understand this. Are you saying these companies issue fresh shares which are then bought by ETFs/ funds that track the index? Does that not mean they are diluting the shareholding of the existing shareholders?

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Joachim Klement's avatar

Yes, that’s exactly what it means. They are slightly diluting the shareholding, just like the times when executive options vest and then are transferred I to new shares previously held in Treasury.

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Ben's avatar

What about the index boot effect? In the past I have had excellent results purchasing S&P 600 index deletions on the day of the boot when positions are being liquidated, then selling them one or two weeks later on the bounce. However I have noticed that the effect has become muted in recent years, not sure why.

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Joachim Klement's avatar

I know, but I don’t know of a study that looks into that systematically.

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