Social aspect of this are also interesting. We use the stock ticker as a reward and punishment for the companies involved, so introducing a new product that sells in unexpectedly large quantities generally leads to the stock price going up, while any bad news, e.g. pollution, poisoning, product recall, illegal behavior by the exec generally lead to a sell-off.
In an index-centric world if neither of the events cause the company to leave the index, I wonder if we'll still see such price adjustments.
The really interesting social aspect, to me, is that we have a huge number of people in the US that are concentrated in the financial sector around active management. What happens to all those people? Are we about to see a huge downsizing of the financial industry?
Is the number huge, though? Retail stock-picking is done through mutual funds and active ETFs, which are typically owned by a larger outfit like Blackrock or Franklin Templeton, so the active stock picking is done by a select few managers of the fund. If that goes away, Blackrock or FT can still sell indexes and variety of bond funds.
On the hedge fund site extreme churn is fairly typical and considered part of the job. Well-known pickers (known mainly due to their windfall successes of the past and survivor bias) like Stephen Cohen, Carl Icahn and John Paulson are motivated less by the need to live paycheck to paycheck and more by the gambler's high.
In an index-centric world if neither of the events cause the company to leave the index, I wonder if we'll still see such price adjustments.