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To believe this is true, you must also believe that efficient markets do not really exist. Imagine if a publicly traded company announced that in 1 years time,

To believe this is true, you must also believe that efficient markets do not really exist. Imagine if a publicly traded company announced that in 1 years time, they would buy back half of their outstanding shares (not a great analogy but its the best I can think of). What would happen to the stock price? All securities prices in publicly traded markets are essentially priced as discounted cash flows over the next 20-30 years. The current price reflects all available public information about those cash flows. I'm not saying efficient markets is 100% true all of the time, of course the world demonstrates that it isn't, but the level of disbelief you have to have in the hypothesis to believe that a well-known public event affecting Bitcoin will result in a 3x price increase is lunacy, IMO.

mudlus 6y ago
Look at the stock market right now, does that seem efficient? Sometimes volatility is necessary. "Imagine if a publicly traded company announced that in 1 years time, they would buy back half of their outstanding shares (not a great analogy but its the best I can think of). What would happen to the stock price?" The irony is that a bunch of companies are and did do EXACTLY this with trillions of dollars designed to bail out the economy.
alextheparrot 6y ago
> All securities prices in publicly traded markets are essentially priced as discounted cash flows over the next 20-30 years Orthogonal, but I do enjoy how every time I see a statement like this, it comes with a different year set of years. This one is 20-30 years, saw one yesterday at 50 years, Investopedia will tell you 5-10 years is the standard [1]. [1] https://www.investopedia.com/investing/pitfalls-of-discounted-cash-flow-analysis/ https://www.investopedia.com/investing/pitfalls-of-discounte...
- nateberkopec 6y ago
  Yeah I just picked a number out of thin air. I suppose it depends on your discount rate + some arbitrary threshold of when you want to say the asset has returned most of it's useful cash flow. For example, a cash flow with a 10% discount rate will return about 90% of all it's discounted future cash flow by year 20. The discount rate depends on the investor, and as for when you stop counting cash flow on the way to infinity, I guess that's up to you.
jraedisch 6y ago
A lot of the goods to be exchanged for bitcoins might be in the "wrong" hands at this moment or will yet have to be produced.
solotronics 6y ago
This is pretty funny because I remember reading this exact same argument the last bitcoin halving in 2016! I still think it's a superior form of money to USD so I'll keep on holding mine for a few years at least.
tarsinge 6y ago
I understand the intellectual appeal of that theory, but in reality given the behavior of the stock market in March (why a sudden drop if 20 years forward looking?), or ZOOM stock going up instead of ZM, Tesla stock moving from an opinion tweet, the volatility of individual stocks, etc... should make you doubt about that "it’s priced in long-term" belief.
- nateberkopec 6y ago
  That's not what the efficient markets theory is. It means that the current price reflects all currently available public information, not that the price magically predicts the future and it can never change. Random events like what you described are completely different from the halvening, which is predictable years in advance almost down to the day.
  - jatone 6y ago
    given that the basis for EMH is untestable its useless. you can't make any assertions or predictions using it.
  - VRay 6y ago
    The Efficient Market Hypothesis is complete BS. It's only relevant in academia, and it'll stay that way since there's no profit to be had going to academia and arguing with professors on their home turf about it. You can see that it's BS by just looking at Warren Buffett's investment returns, all collected from exploiting long term market inefficiencies.

mudlus 6y ago

Look at the stock market right now, does that seem efficient? Sometimes volatility is necessary. "Imagine if a publicly traded company announced that in 1 years time, they would buy back half of their outstanding shares (not a great analogy but its the best I can think of). What would happen to the stock price?" The irony is that a bunch of companies are and did do EXACTLY this with trillions of dollars designed to bail out the economy.

alextheparrot 6y ago

> All securities prices in publicly traded markets are essentially priced as discounted cash flows over the next 20-30 years Orthogonal, but I do enjoy how every time I see a statement like this, it comes with a different year set of years. This one is 20-30 years, saw one yesterday at 50 years, Investopedia will tell you 5-10 years is the standard [1]. [1] https://www.investopedia.com/investing/pitfalls-of-discounted-cash-flow-analysis/ https://www.investopedia.com/investing/pitfalls-of-discounte...

nateberkopec 6y ago
Yeah I just picked a number out of thin air. I suppose it depends on your discount rate + some arbitrary threshold of when you want to say the asset has returned most of it's useful cash flow. For example, a cash flow with a 10% discount rate will return about 90% of all it's discounted future cash flow by year 20. The discount rate depends on the investor, and as for when you stop counting cash flow on the way to infinity, I guess that's up to you.

jraedisch 6y ago

A lot of the goods to be exchanged for bitcoins might be in the "wrong" hands at this moment or will yet have to be produced.

solotronics 6y ago

This is pretty funny because I remember reading this exact same argument the last bitcoin halving in 2016! I still think it's a superior form of money to USD so I'll keep on holding mine for a few years at least.

tarsinge 6y ago

I understand the intellectual appeal of that theory, but in reality given the behavior of the stock market in March (why a sudden drop if 20 years forward looking?), or ZOOM stock going up instead of ZM, Tesla stock moving from an opinion tweet, the volatility of individual stocks, etc... should make you doubt about that "it’s priced in long-term" belief.

nateberkopec 6y ago
That's not what the efficient markets theory is. It means that the current price reflects all currently available public information, not that the price magically predicts the future and it can never change. Random events like what you described are completely different from the halvening, which is predictable years in advance almost down to the day.
- jatone 6y ago
  given that the basis for EMH is untestable its useless. you can't make any assertions or predictions using it.
- VRay 6y ago
  The Efficient Market Hypothesis is complete BS. It's only relevant in academia, and it'll stay that way since there's no profit to be had going to academia and arguing with professors on their home turf about it. You can see that it's BS by just looking at Warren Buffett's investment returns, all collected from exploiting long term market inefficiencies.