Personal Finance & Money Asked on March 1, 2021
I invest in a couple of ETFs in Europe and regularly I observe results such as:
If the ETF followed precisely the index, it should have gone down since both the index and the EUR/DOL went down. This should mean that the market maker will force the price to go down tomorrow. Can’t we use this to arbitrage? (We could short sell the VUSA today, for example.)
I really think that my reasoning is wrong since otherwise we really could make millions like that. But I don’t know where I’m wrong.
Try this answer, replacing "US ETF tracking Chinese index" with "European ETF tracking US index".
The implication is that the market has a fair price at every moment, and arbitrage is not possible (for anyone but the fastest traders), once you take into account that stale quotes (like a closing price from hours ago) are not prices you can trade at.
Correct answer by nanoman on March 1, 2021
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