Single greatest profit potential in the market

More on Secrets of the Trading Pros: Techniques & Tips that Pros Use to Beat the Markets (Wiley Trading)

Page 43, in reference to stocks being added to or deleted from indexes such as the S&P: “During the few times a year when we witness a rebalancing of the indexes, the opportunity for a high-percentage trade is never better…the logic is that hundreds of billions of dollars that are indexed against the S&P must make the changes so the portfolios under management don’t have any tracking errors. Many of the index funds must, by charter, make the changes on the close of business, as the rebalancing is complete…the profit potential in that situation is greater than that from any other single phenomenon in the market.”

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