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Why do institutional investors undermine price discovery? This comment doesn't make sense to me.

> The latest numbers i have seen is that 80% of the market shares is controlled by institutional investors.

Institutional investor != passive investment.

As long as trades are happening, there is some sort pricing mechanism.



I'd guess there is there is too much money in it due to the fact that central banks killed interest rates and started buying government bonds as needed - where pension funds would hold those they now need to search positivie returns and there's just not enough good bets there - would explain why the valuations are sky high


You've confused cause and effect.

Declining expectations for NGDP growth/uncertainty lead to funds searching for yield in the credit markets, leading to declining yields.

Bond yields declined prior to Fed intervention [0]

[0]: https://fred.stlouisfed.org/series/DGS10


more due to the fact we massively move retirement payments to market investment instead of redistribution and at the same time boomer begun retiring.

Basically we moved back to a renting society.


Because their goals are not price discovery. Price discovery needs taking risk. All of them are not allowed to reduce the principal.

They would better reduce return than touch the principal.

This is a rent market. Not an investment one.

Rent market are more comparable to land value than to investment markets. Thibk of the use of corn as a relatively bad economic choice for profit but great for rent stability as an example.

That is what something like retirement and endowment need.


> As long as trades are happening, there is some sort pricing mechanism.

Sure but my concern is that pricing now looks less about fundamentals and more about the meta game of what other traders are gambling at the moment. What do you think about the price discovery mechanism for Bitcoin for example?


There is no such thing as "fundamentals," value is in the eye of society - so pricing is also in the eye of society.

Bitcoin is operating under a great deal of uncertainty about its future prospects/the prospects of blockchain.

https://www.themoneyillusion.com/richard-rorty-and-the-effic...




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