Why does Marketocracy delist low-volume stocks?
Yes, it may penalize those whose strategy depends on buying small, illiquid stocks. However, keep in mind that for real money mutual funds, such low-volume stocks can be hard to buy, hard to price, and hard to sell: • Mutual funds must allow investors easy redeemability of their shares. In order to redeem shares, a fund needs an accurate price for the fund. If a significant portion of a fund’s assets are tied up in a small, illiquid stocks with erratic pricing, the fund manager can’t accurately price the fund overall. • SEC regulations prevent mutual funds from owning more than 10% of the outstanding voting securities. Although not so much of an issue for small funds, large funds can’t buy a proportionate amount of small companies, because it would cause a large fund to own too much of the company’s stock. • Funds may have difficulty purchasing thinly traded stocks in a timely manner, so that by the time the fund can get enough shares, the price of the stock may have changed quite a bi
