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Seth Klarman and Forced Selling by Index Funds


rukawa

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[Edited] In Margin Of Safety, Seth Klarman talks again and again about how investors have to take advantage of predictably irrational Institutional Behavior. One example he mentions is forced buying when stocks are added to indexes. I wonder whether anybody has experience with this? Does it work and what are the typical timelines and returns?

 

Anyways on the bogleheads site there is an excellent example with BlockBuster than illustrates the phenomenon.

 

http://www.bogleheads.org/forum/viewtopic.php?t=69006

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