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1. Markets aren't efficient. They're full of emotion and greed. They can be irrational. Just look at Brexit - even stocks that had zero exposure to the UK (dire
by charlesdm 10y ago
1. Markets aren't efficient. They're full of emotion and greed. They can be irrational. Just look at Brexit - even stocks that had zero exposure to the UK (directly or indirectly) sold off significantly.
2. Why would you assume you can't do better than an analyst, in your area of expertise? Someone who understands tech well will be able to make better tech investments, than, let's say, investments in mining. That seems pretty obvious to me. That doesn't means you'll always get it right, but it does increase chances significantly.
- arjie 10y ago1. Did they actually have zero exposure to the UK? There are knock-on effects. If many airlines had exposure to the UK and this oil company only sold to american airline companies, they still effectively have exposure to the UK. If this spring manufacturer had the majority of their deals with that oil company, then they're going to suffer with them. I'm not saying you're wrong. I used the same hypothesis to buy on Brexit panic, but I don't know if it was correct. 2. Honestly, the analysts got it wrong in their own area of expertise often enough that I don't think it makes sense to pretend they're oracles in comparison to anyone else.
- philh 10y agoYou don't just have to beat the analysts. You have to beat all the other people in tech who think they can beat the analysts.
- jgalt212 10y agoMarkets are efficient because you cannot effectively predict how long emotion, greed, and irrationality will drive the bus before rationality once again prevails.