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The actual question is whether the market thinks that future efficiency gains are on the way or not. If the market does, then that efficiency is already priced
by jjeaff 7y ago
The actual question is whether the market thinks that future efficiency gains are on the way or not. If the market does, then that efficiency is already priced in and you can't make any money off of it.
What you actually have to figure out is: is there any unexpected future efficiency gains that the market doesn't expect. You have to know something that the market does not.
- strbean 7y ago> The actual question is whether the market thinks that future efficiency gains are on the way or not. If the market does, then that efficiency is already priced in and you can't make any money off of it. Isn't this ignoring opportunity cost, uncertainty, etc.? If the expectation of future gains is priced in, wouldn't treasury bonds sell for face value + remaining interest on the secondary market?
- outworlder 7y agoI guess they are assuming perfect knowledge.
- strbean 7y agoI'm sure all the players are acting rationally as well!