It wouldn't be about beating the Index, it would be about providing liquidity to the market to minimize the distortive effect that an addition of this size could have. This has the feel of something that S&P facilitated with the market makers.
I don't think it's wise to ignore the probability of something like this. And it's almost certainly going on with many of the benchmarked funds.
I don't think it's wise to imagine a huge liquidity shortage when the numbers don't seem to support it.
Even the most heavily time-restricted index funds have roughly 6 trading days to buy in. Some have even more time.
Benchmark funds have no time limits at all.
Total amount the indexes need is roughly 2.5 days average volume.
So even in "average" conditions there's plenty of liquidity for them to fill their buys in the time they have.
In a situation like this one, where we know at least SOME significant # of shares have been front-run specifically to sell for a profit to the index funds, it should be even less of an issue.
Now if you're just straight HODL- you don't care. You're not selling at 500, 600, 700, or anything right now. So whatever.
If you're looking to exit some position on this spike though- you're effectively playing chicken with all the other folks hoping to do the same.
If the index funds MUST buy 15% of the float, and you're someone who thinks it's gonna spike to $1200 and you'll sell then, you're going to need to hope there's not 15% of holders who had a lower "profit enough" target than you did.
I think there's lots of dedicated TSLA longs here who do have 4-figure targets they'll sell for (some higher than 1200 even).
But I'd be pretty surprised if there's not 15% of the float well below that number for sale.
I'm not gonna claim to have any chance of guessing what the top is.... but I'd happily take any reliable better than even money bet on it being 3 figures rather than 4 to the left of the decimal.
