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I don't think he was being insulting. He was just explaining that the incentives discourage anyone from publicly disproving the efficient market hypothesis.
by cjy 16y ago
I don't think he was being insulting. He was just explaining that the incentives discourage anyone from publicly disproving the efficient market hypothesis.
- lars512 16y agoThis is where it gets fun though. An inefficiency being found amounts to you knowing something about pricing that others don't. You exploit it for profit, and the process of exploiting it removes or reduces the inefficiency. The only way the market is truly screwed is if consistent arbitrage opportunities become available, but the kinds of inefficiencies people find seem more transient than consistent. On another note, betting markets are (or were) apparently far less efficient than financial markets, in that the true likelihood of a team/horse/camel winning in a competition may be different to the money which punters are willing to bet on it. I know of a guy who made his fortune after many gruelling years by finally coming up with prediction models which worked in these kind of gambling scenarios.