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> If that worked, everyone would do it, and so it would no longer work. This simply isn't true. Sometimes there are dollar bills on the ground. It takes a lot
by 55555 6y ago
> If that worked, everyone would do it, and so it would no longer work.
This simply isn't true. Sometimes there are dollar bills on the ground. It takes a lot of years for everyone to pick them all up.
Keep in mind that the efficient market hypothesis disproves(TM) starting a successful business just as well as it disproves finding a successful trading strategy. ie: if that were a good startup idea, someone would have already started it, so it can't be an opportunity any longer. EMH is a useful tool but in reality it takes a long time after a fundamental shift creates an opportunity for it to be arbitraged away, and sometimes the opportunity ends due to another fundamental shift, not due to people arbitraging it away.
- WalterBright 6y agoPeople copy other successful businesses all the time. Granted, it takes some time, but innovative business ideas become mainstream if they're successful. Keep in mind that changing an investment strategy is simply changing the algorithm used. If I was running a fund returning 7% yoy, and yours was returning 10% yoy, you bet I'd be telling my staff to try out your algorithm. Magellan was the biggest fund in the world until other funds adopted their innovations and it pretty much reverted to the mean.
- bugzz 6y agoSure, but in finance it's not clean. It's not like one fund is getting 10% every single year and the other 7% every single year - there's high variability. The fund that'd underperforming may expect that the other fund's strategy is likely to blow up once every 20 years and thus not be worth it. It takes decades to get statistically significant results, and by then the world has changed.