ELI5: Why is market cap index tracking a good idea?

I'm reading about a trading strategy that allocates according to market cap (I get that point, plus discretionary weighting), then re-balances, weekly or monthly. That's here: http://ift.tt/2sQZOqS

And I cannot for the life of me wrap my head around why re-balancing according to market cap would be a good thing.

If the market cap of a coin moves, I'd assume it does so mostly because of price relative to other coins, not because of great fluctuations in how many coins are available.

If market cap goes down, price is down. If market cap goes up, price is up. If I am then re-balancing to fit the new percentages, I am selling a percentage of my holdings of the "down" coin at a lower price than I bought them, and buying some more of the "up" coin while its price is high.

Wouldn't this, over time, cause me to buy high and sell low? What am I missing here? If that question appears a bit daft, assume I'm a bit daft, not that I'm trolling. I genuinely don't get it.

submitted by /u/yorickdowne
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