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I just learned this from watching @profplum99, so don't blame me if I got it wrong. MS for example will trade 5-10 times as many shares as the smaller less liquid Delta Air (100x smaller then MS). In MS the bid/ask spreads are tighter and is less profitable for the market makers to trade MS. So the market makers put less capital towards trading large companies, which means trades in MS result in MS stock moving more because there is less market making on those trades. Therefore, passive flows affects large cap companies a lot more than small ones.
Also some of these passive index funds they statistically sample the index to approximate it – for example they can ignore Delta Air because it is tiny! So that results in passive flows impacting the largest stocks even more!
One of our students tried training a medical Q&A model for fun. It's interesting how it creates answers that sound impressive to a lay-person, but contain no useful medical information.
I'm concerned that this will become a big issue for generative NLP.
@CourseHero is 250th on @Deloitte's 2017 Technology Fast 500 - a list of the fastest growing #tech companies in North America. Check it out! https://t.co/HKZMwxlHz5 #edtech#startup