No. Vanguard is a large participant in the markets because it manages funds for long-term investors. Markets have bid and offer prices where you can instantaneously sell or buy shares, and these bids and offers are often provided by professional market-makers. Before automation, these were humans on an exchange floor. They could only trade a single stock at a time, hence the name "specialist", since they specialized in that issue. Volumes were also lower. To make enough to earn a living, that human on the exchange floor had to charge a big spread between buy and sell prices. For a long-term investor, this spread is an additional friction cost that drags on their returns when rebalancing portfolios.
Now a small team of researchers can make markets on many securities at once. They don't have to make as much money on each, so the spreads get smaller. Additionally, instead of a monopolistic specialist, these professional traders compete to win transactions by making better prices (higher bids and lower offers) than others. Many market makers try to keep a neutral "book" of positions, so if they sell some GS they may bid higher in other bank stocks to reduce their exposure to market risk. The faster a market maker can update his quotes or hedge when conditions change, the less spread he needs to charge.
Now a small team of researchers can make markets on many securities at once. They don't have to make as much money on each, so the spreads get smaller. Additionally, instead of a monopolistic specialist, these professional traders compete to win transactions by making better prices (higher bids and lower offers) than others. Many market makers try to keep a neutral "book" of positions, so if they sell some GS they may bid higher in other bank stocks to reduce their exposure to market risk. The faster a market maker can update his quotes or hedge when conditions change, the less spread he needs to charge.
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