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It is trivial to outperform the market by insider trading, thus markets are inefficient. The efficient market hypothesis isn't dead, it was never true.
by mjfl 6y ago
It is trivial to outperform the market by insider trading, thus markets are inefficient. The efficient market hypothesis isn't dead, it was never true.
- perl4ever 6y agoI think empirically it's neither trivial nor impossible. For instance, say you are a CEO and earnings are about to be announced for your company. You know exactly what the earnings are going to be, and what the published expectations are, so you know how much they will beat or fall short. Does that mean you know how the market will react? I think people who have been in that position would tell you no. There was something in the news about someone who hacked into a database with earnings press releases that gave them access just a little early. And someone did an analysis of how reliably this worked to make money. It wasn't 100%!
- mjfl 6y agoIf you frontrun a merger or a huge earnings miss, there's nearly a 0 percent chance you will lose money, and you can further leverage with options.