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If the market is priced perfectly efficiently you will still make money because your capital is put to work. A perfectly efficient market just means you can't b
by paulgb 9y ago
If the market is priced perfectly efficiently you will still make money because your capital is put to work. A perfectly efficient market just means you can't beat that intrinsic rate of return.
- ZitchDog 9y agoWouldn't this expectation be built into the current price of the stock?
- paulgb 9y agoYes, but money in the future is valued at a discount today. So even if an asset is 100% sure to be worth $100 a year from today, the market will value it at slightly less than that because there's no sense tying up $100 in capital for a year unless you get some profit in return.
- brokensegue 9y agothe risk you take for those returns means the price won't fully match the expectation. but you can mitigate that risk via diversification.
- darawk 9y agoTrue. But that is irrelevant to the original point: Cryptos are as much investments as any stock or commodity. And anyway, that future expectation of profit ought to go into risk-free treasuries unless you want to gamble on a specific, higher risk asset.