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Rational/efficient markets don't mean no irrational players. It just means that those players get punished for their irrationality, which is exactly what happen
by mardifoufs 7y ago
Rational/efficient markets don't mean no irrational players. It just means that those players get punished for their irrationality, which is exactly what happened here. If anything efficient markets hypothesis is based on the fact that low/bad information is penalized which in turn makes markets more efficient ;)
- vikramkr 7y agoTechnically everyone can be rational if their utility curve is optimized by buying the wrong zoom
- mardifoufs 7y agoYep! I think Matt Levine talked about that recently. Though to be honest, speculating on an almost "fake" stock isn't exactly rational (from the perspective of an individual market participant) because there is no way to even try to optimize the utility curve.
- vikramkr 7y agoUnless you find it fun to gamble. Risk seeking utility curve
- mardifoufs 7y agoAh! But we already have SPY options if you want your fix of purely degenerate gambling. I won't disagree that it's super fun! ;)
- vikramkr 7y agoSome of my professors would include tesla in that list haha. To each their own!