3 ms·
market irrationality is generally due to 1. a large entity throwing money away to achieve some outcome. he will eventually be eaten by arbitrage unless he has
by nazgulnarsil 16y ago
market irrationality is generally due to
1. a large entity throwing money away to achieve some outcome. he will eventually be eaten by arbitrage unless he has arbitrary amounts of capital (state actors)
2. the person stating this not understanding what a rational market means.
- revorad 16y agoIt's an analogy, not meant to be taken literally.
- nazgulnarsil 16y agoyou may want to talk to all the people who take the idea quite seriously as a critique of market speed in reaching equilibrium.
- iwwr 16y agoIt just means that you can have large numbers of participants being wrong and so, by their sheer weight become unmanageable to a smaller entity which however has the correct picture. This is why short-selling is not for the faint of heart. You need to know not just that the market is wrong, but when it will realize it is wrong.