5 ms·

That’s actually a huge opportunity though. If you have a small edge in information, you can make millions. Undoubtedly, there can be no such thing as perfect m

That’s actually a huge opportunity though. If you have a small edge in information, you can make millions. Undoubtedly, there can be no such thing as perfect market efficiency because information takes time (even in our interconnected age) to travel, be grok’d and then acted upon. Companies that focus on building an edge on either analytics or an edge on information gathering are where the real money is.

njarboe 8y ago
While a lot of people can acquire a lot of money by being a slightly better predictor of what the short term market thinks is the the future cash flow of public companies will be, it is a bit sad that this skill is valued so highly. So many really smart and hardworking people spend their whole lives doing it. They can end up with a lot of money, but I don't think they produce much wealth. Similar to how getting people to click on ads is really lucrative but also is more of a zero sum game than productive. Not sure how to get more people to work on more interesting things like fusion power, rocket ships, electric powered transportation, etc. instead of skimming off of zero sum transactions. Just taxing the rich at high rates also kills the few golden geese.
sytelus 8y ago
> If you have a small edge in information, you can make millions. This is one of the misnomer. Economics has enough random stuff and complexity that small edge doesn’t make huge difference. For example, you can get satellite photos of 100 sample Walmart stores and observe it’s parking lot to conclude that perhaps their quarter would end in negative side. But you might not be aware that the slack is being picked up more than enough by their online operations or that they have new deals for partnerships or some law about to be passed that taxes competition more.
- pc86 8y ago
  To be fair, if you are making huge trading decisions like this on consumer retail, and ignoring the online component of the third largest online retailer in the US, you're going to lose all your money eventually anyway.
- MR4D 8y ago
  Uh, no. The key word in the parent poster’s sentence was “can”. You only need one example to prove it - tons of failing examples do not disprove it. For example: If you lived next door to the head server guy at Wells Fargo, and the other night his wife called you to cancel their dinner with you because “there is some big problem at work that he’s dealing with and he has to work thru the night”, and then you decided to short WFC that next morning, then you would have done quite well, but importantly, the information edge would be not only small, but also non-specific.
  - sytelus 8y ago
    Well, the guy could be some manager of some small project with some release deadline on his head. This may not have any impact on quarterly financials of $10B company. Big companies like this are very complex creatures and trying to bet because you had glimpse on one data point is trying to predict weather for next month because you felt breeze on your walk.
    - MR4D 8y ago
      You're correct - I should have been more clear on the titling - when I think head server guy, I'm thinking a VP or above level.
scottdupoy 8y ago
> That’s actually a huge opportunity though. If you have a small edge in information, you can make millions. Also, if you can act on public information faster than others then you effectively have that edge in information.

njarboe 8y ago

While a lot of people can acquire a lot of money by being a slightly better predictor of what the short term market thinks is the the future cash flow of public companies will be, it is a bit sad that this skill is valued so highly. So many really smart and hardworking people spend their whole lives doing it. They can end up with a lot of money, but I don't think they produce much wealth. Similar to how getting people to click on ads is really lucrative but also is more of a zero sum game than productive. Not sure how to get more people to work on more interesting things like fusion power, rocket ships, electric powered transportation, etc. instead of skimming off of zero sum transactions. Just taxing the rich at high rates also kills the few golden geese.

sytelus 8y ago

> If you have a small edge in information, you can make millions. This is one of the misnomer. Economics has enough random stuff and complexity that small edge doesn’t make huge difference. For example, you can get satellite photos of 100 sample Walmart stores and observe it’s parking lot to conclude that perhaps their quarter would end in negative side. But you might not be aware that the slack is being picked up more than enough by their online operations or that they have new deals for partnerships or some law about to be passed that taxes competition more.

pc86 8y ago
To be fair, if you are making huge trading decisions like this on consumer retail, and ignoring the online component of the third largest online retailer in the US, you're going to lose all your money eventually anyway.
MR4D 8y ago
Uh, no. The key word in the parent poster’s sentence was “can”. You only need one example to prove it - tons of failing examples do not disprove it. For example: If you lived next door to the head server guy at Wells Fargo, and the other night his wife called you to cancel their dinner with you because “there is some big problem at work that he’s dealing with and he has to work thru the night”, and then you decided to short WFC that next morning, then you would have done quite well, but importantly, the information edge would be not only small, but also non-specific.
- sytelus 8y ago
  Well, the guy could be some manager of some small project with some release deadline on his head. This may not have any impact on quarterly financials of $10B company. Big companies like this are very complex creatures and trying to bet because you had glimpse on one data point is trying to predict weather for next month because you felt breeze on your walk.
  - MR4D 8y ago
    You're correct - I should have been more clear on the titling - when I think head server guy, I'm thinking a VP or above level.

scottdupoy 8y ago

> That’s actually a huge opportunity though. If you have a small edge in information, you can make millions. Also, if you can act on public information faster than others then you effectively have that edge in information.