Tuesday, June 21, 2011

What happens when there is more money than investable stocks ?

Snapshot Summary :
---------------------------
. Investment funds bigger than the investment markets
. Most emerging market funds have more assets than the GDP of the countries they invest in.
. Economics is one thing
. Funds mechanics is another.
. What happens when
Funds monies > investable stocks
More money chasing equities than there are companies
. Price goes up
. Regardless of economics ??
. If the sharp recovery of the crash is anything to go by, Yes!
. Liquidity is everything !

http://blogs.barrons.com/focusonfunds/2011/06/21/big-emerging-markets-funds-too-big-to-fail/?mod=BOLBlog

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