Ideanomics Inc (IDEX)

[nsomniyak]

I don't think you understand how the index funds that would buy the Russell 3000 work. Once a year, on a specific date, the index is "reconstituted". In the case of the Russell 3000, something like 10-20 stocks will move in (as they are now among the top 3000 by market cap) and the same number will move out (they are no longer among the top 3000 or, in some cases, they may have been acquired, etc.). It is a relatively easy exercise to rank all the stocks by market cap 3-4 weeks in advance and see where the cut will be.

The whole point of an index fund is to mimic the performance of the underlying index. Therefore the managers of those funds don't buy the new stocks (and sell the old ones) until the composition of the index actually changes. Not buying the new ones before then is not an externally imposed rule of any kind - it is a natural SELF-IMPOSED rule due to the nature of the fund.

No one is cheating.