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You say you didn’t see it happening and I’m asking what would you have seen if you had seen it. What would have been different? Where would have you seen this pretrading that you didn’t see? Who is that someone that would have been selling those shares but didn’t?

by everforward6 hours ago|

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Broad strokes, you would expect to see a withdrawal of funds from the market by anyone following equal weight funds. New entrant means you have to pull money out of existing stocks to re-allocate to the new entrant to maintain equal weights.

It would be visible at a macro level, you’d see a higher sell volume and probably a drop in price as all the equal weight funds rebalance.

There’s a heavy motivation to be the first mover here, because those sells will cause a supply spike and price drop. By being the first mover, you can rebalance before prices drop.

I don’t have sell volume data, but we didn’t see price drops so either a) the market did not believe and no one rebalanced, or b) few funds rebalanced, and the other funds disbelieved enough that they thought the risk premium was so small they could buy at a slight discount and profit, balancing supply and demand.

by kgwgk6 hours ago|

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> would expect to see a withdrawal of funds from the market by anyone following equal weight funds

Would you see funds reducing their equity exposure and going into cash or what? Which funds would do that? Trackers wouldn’t do that so where would you see that withdrawal of funds?

> New entrant means you have to pull money out of existing stocks to re-allocate to the new entrant to maintain equal weights.

If you mean someone tracking an equal weight index the weights would be essentially the same after the inclusion of SPCX replacing some other constituent. Except for the stock being replaced, of course.