> will everyone try to sell the same set of funds and will crash the funds themselves?
The ETF is backed by stocks in other companies, so if one person tries to sell someone else should be willing to buy, so long as the sale price * the number of shares is below the collective value of all of the shares held by the ETF.
Collective ownership of companies is a more interesting question. If everyone owns fractions of every company, what are the incentives for good governance at any one company? If it goes bankrupt, it's only a tiny fraction of everyone's portfolio.
Matt Levine has covered the latter beat for quite some time.
> If everyone owns fractions of every company, what are the incentives for good governance at any one company? If it goes bankrupt, it's only a tiny fraction of everyone's portfolio.
And all the other companies in the same market segment will then gain a share of the customers and income of the now bankrupt company, so there is little to no effect overall.
Of course this is exactly why some people choose to invest in markets instead of individual companies, because that has less risk.
Of course this is also why other people choose to invest in companies they assessed are way ahead of their market, because that is more profitable.
The ETF is backed by stocks in other companies, so if one person tries to sell someone else should be willing to buy, so long as the sale price * the number of shares is below the collective value of all of the shares held by the ETF.
Collective ownership of companies is a more interesting question. If everyone owns fractions of every company, what are the incentives for good governance at any one company? If it goes bankrupt, it's only a tiny fraction of everyone's portfolio.
Matt Levine has covered the latter beat for quite some time.