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buying and selling of mutual funds of stocks that a person owns?
a brokerage firm says that it will let you know if your stocks are being bought and sold by mutual funds. What exactly does that mean and why would it be a problem, or is it a problem? thank you.
bud68 1:04 pm on August 11, 2010
Mutual funds (and hedge funds) usually buy and sell in large share quantities, which affects the market value.
golferwhoworks 1:04 pm on August 11, 2010
if they buy a huge block the price goes up but when they sell a huge block your price goes down
Robert M 1:04 pm on August 11, 2010
The stock market is just that a market. Mutual funds are large buyers and sellers. Prices are determined not only by fundamentals but supply and demand. Proper terms are accumulation and distribution.
You don’t need a broker to tell you this information it is available online, or Investor’s Business Daily, or SEC filings which mutual funds have to file. Timeliness is another question.
Patrick D 1:04 pm on August 11, 2010
Your mutual fund is like a basket of eggs, sometimes the fund manager will feel good about certain eggs and add more, or some may be a bit stinky, in which case they will sell those and replace them with other funds they feel bullish on. The average mutual fund has about 100 individual stock holdings in it. Each fund has a "turnover-ratio" this is a calculation of how often the fund manager replaces the stocks in the fund, if it’s 100% then in any given year, the manager most likely replaced 100% of the stocks you began with, if it’s 50% than half of the funds have been replaced. They don’t disclose when they buy and sell, but they will tell you at any given time what stocks the fund holds. It is basically how all mutual funds and managed portfolios work.