> There isn’t any empirical evidence that they work though. What I'm saying is that traders are good at predicting the absolute rate of return of investments b

> There isn’t any empirical evidence that they work though. What I'm saying is that traders are good at predicting the absolute rate of return of investments but bad at predicting their return relative to their price. Companies that the traders have valued at $1B actually do make 1000 times as much on average as the companies they have valued at $1M. This is the analogue of meteorologists being good at predicting the weather. But if a single trader says that a company will do better than the rest of the market thinks, then that trader will do no better than chance. Similarly if a meteorologist thinks that rain is more likely than the rest of the meteorologists, then they'll be right no more often than chance. Asking meteorologists to predict rain but traders to predict relative price movements is an unfair comparison. Either compare the meteorologists' predictions of rain with the market's prediction of absolute profits, or compare the meteorologists' predictions of how much their predictions will change with the markets relative predictions of profits. > If it was possible to bet on the weather forecast, it would be the surest way to make money in the world. No, because the person you were betting against would only bet at odds matching the best meteorologists' predictions.