I’d love to get evidence on that and it seems important.
Your position doesn’t sound right to me. You don’t need many people changing their allocations moderately to totally swamp a 1% change in inflows.
My guess would be that more than 10% of investors, weighted by total equity holdings, adjust their exposure deliberately, but I’d love to know the real numbers.
Regarding safer assets, when you put your money into a savings account (loan it to the bank), what is the bank to do with it? Presumably it has promised you interest. Or if you buy treasuries—someone must have sold them to you—what do they do now with all the cash? Just because you personally didn’t put your money into stocks does’t mean nobody else downstream from you did.
And because most securities aren’t up for sale at any given time, a small fraction of market participants can have outsized effects on prices. Consider oil back in April: sure the “prices” turned “negative” when a few poor suckers realized they had forgotten to roll their futures to the next month back when everybody else did and could get stuck with a physical delivery, but how many barrels worth of contracts did actually change hands at those prices?
Not sure how this would support the OP’s point specifically, but just wanted to point out that 1%-level things can sometimes have large manifestations in “prices”, just because liquidity is finite.
I’d love to get evidence on that and it seems important.
Your position doesn’t sound right to me. You don’t need many people changing their allocations moderately to totally swamp a 1% change in inflows.
My guess would be that more than 10% of investors, weighted by total equity holdings, adjust their exposure deliberately, but I’d love to know the real numbers.
Regarding safer assets, when you put your money into a savings account (loan it to the bank), what is the bank to do with it? Presumably it has promised you interest. Or if you buy treasuries—someone must have sold them to you—what do they do now with all the cash? Just because you personally didn’t put your money into stocks does’t mean nobody else downstream from you did.
And because most securities aren’t up for sale at any given time, a small fraction of market participants can have outsized effects on prices. Consider oil back in April: sure the “prices” turned “negative” when a few poor suckers realized they had forgotten to roll their futures to the next month back when everybody else did and could get stuck with a physical delivery, but how many barrels worth of contracts did actually change hands at those prices?
Not sure how this would support the OP’s point specifically, but just wanted to point out that 1%-level things can sometimes have large manifestations in “prices”, just because liquidity is finite.