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It isn't priced in. Not even close. In markets with non-financial traders, by definition, everything can't be priced in (you see this in commods, forex...it is

It isn't priced in. Not even close. In markets with non-financial traders, by definition, everything can't be priced in (you see this in commods, forex...it is why these markets trend). Again, in most of these markets supply cannot respond quickly so you get trending price action. Predicting the future is relatively straightforward. You just look at fundamentals, and for most commodities it is fairly easy to predict how demand/supply is going to change. Predicting the future and how people will react is not.

gruez 5y ago
>In markets with non-financial traders, by definition, everything can't be priced in (you see this in commods, forex...it is why these markets trend). What are you talking about? commodities and forex is crawling with HFTs and hedge funds. Also, just because there's a trend dosen't mean you can profit from it. Let's say soybean futures are cheaper in the fall (harvest time) than in the spring. Easy opportunity to make some money right? Just buy in the fall and sell 6 months later. Not so fast, soybeans aren't like stocks where you can hold on to them for $0. You have to take delivery of the soybeans in fall and find a place to store it. That probably eats up a fair chunk of your potential profits. Factor in the risk and your profits will be marginal.
- hogFeast 5y ago
  I don't know what you mean. HFTs (and some hedge funds) trade over time horizons with no information...therefore, it is unrelated to anything I am saying (they respond to liquidity, not fundamentals). You don't understand. The reason why price trends is because there is a persistent imbalance between supply and demand because of the presence of non-financial buyers who take liquidity at bad prices. Your point about soybeans make no sense, contango exists and is why commodity houses often have huge trading arms that generate lots of profit (they can put on contango trades like storing oil offshore in a tanker for six months). The reason why these trades generate profit, again, is because of a persistent imbalance between demand and supply (this is also why oil traded at negative prices...although this is slightly more complex because it involved financial buyers running ETFs who got stung by roll risk due to their own incompetence). But, either way, the point is that you can observe that demand and supply is out of balance now and buy, and make money because prices will continue to rise because supply can't be brought on quickly (a good example of this is copper: exploration has been poor for a decade plus, head grades continue to fall...there is no way to bring on supply for years).

gruez 5y ago

>In markets with non-financial traders, by definition, everything can't be priced in (you see this in commods, forex...it is why these markets trend). What are you talking about? commodities and forex is crawling with HFTs and hedge funds. Also, just because there's a trend dosen't mean you can profit from it. Let's say soybean futures are cheaper in the fall (harvest time) than in the spring. Easy opportunity to make some money right? Just buy in the fall and sell 6 months later. Not so fast, soybeans aren't like stocks where you can hold on to them for $0. You have to take delivery of the soybeans in fall and find a place to store it. That probably eats up a fair chunk of your potential profits. Factor in the risk and your profits will be marginal.

hogFeast 5y ago
I don't know what you mean. HFTs (and some hedge funds) trade over time horizons with no information...therefore, it is unrelated to anything I am saying (they respond to liquidity, not fundamentals). You don't understand. The reason why price trends is because there is a persistent imbalance between supply and demand because of the presence of non-financial buyers who take liquidity at bad prices. Your point about soybeans make no sense, contango exists and is why commodity houses often have huge trading arms that generate lots of profit (they can put on contango trades like storing oil offshore in a tanker for six months). The reason why these trades generate profit, again, is because of a persistent imbalance between demand and supply (this is also why oil traded at negative prices...although this is slightly more complex because it involved financial buyers running ETFs who got stung by roll risk due to their own incompetence). But, either way, the point is that you can observe that demand and supply is out of balance now and buy, and make money because prices will continue to rise because supply can't be brought on quickly (a good example of this is copper: exploration has been poor for a decade plus, head grades continue to fall...there is no way to bring on supply for years).