Ask Colin

Do the fund managers/institutions buy in the last 1/2-hour of trading and can they do so without distorting the true supply-demand relationship?

Fund managers and institutions will buy whenever their price is available. There would be no reason for them not to trade in the last half hour. Indeed there is an "after-market" session for large deals. Fund managers and institutions cannot help affecting the price. Whether this is distorting the "true" supply demand relationship is a strange idea. They are part of the supply/demand relationship, so how can they be thought to be distorting it?

What I think you are alluding to is the idea that there may be a large seller or buyer who is moving the market. If they complete their order with some aggression, they will move the market, which may then settle back to a different level. However, I see this as a change in the supply/demand relationship when their order is complete, rather than a distortion of it.

It seems to me that the idea of "distorting" the price is a value judgement, usually made by someone who is on the wrong side of the market and thinks they are being unfairly disadvantaged by the big buyer or seller. This is close to a paranoid reaction. All such unhealthy responses to the market are because the observer is out of tune with reality. Large buyers and sellers are the reality, not the bogy man that ruined a good trade.

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