STREET DOGS: Investors who shun valuation come in varied shades
When a share is held more or less exclusively by the will not, cannot and chose not brigades, it becomes disconnected from fair value
When we speak of valuation-indifferent investors, we mean investors for whom valuation is not part of the process. They either will not, cannot or choose not to consider valuation as a factor.
Will not: Index funds are the most obvious valuation-indifferent investors. In fact, to the extent a stock is overvalued, index funds are required to buy even more of it. Passive investing has become so prevalent that passive index investors are no longer price-takers, buying at the prevailing price set by active investors engaging in a vigorous effort to determine the correct value, but rather price-makers. Their demand sets the price...
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