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What do you mean? There is no way to make it simpler because that is what it is: markets are not some kind of hyper-intelligent, sentient being. If you put garb

What do you mean? There is no way to make it simpler because that is what it is: markets are not some kind of hyper-intelligent, sentient being. If you put garbage in, garbage comes out (and markets operate within a regulatory/social construct that means they do not accurately predict the future). You will never be able to "assess" it (just as most "proof" of EMH is non-existent, it is as precise as it is wrong). Right, and I am saying the logic used in that link is wrong (it is also circular...everything is always priced in, how do you know? Because the price says so...saying that seasonal patterns reflect risk is also bizarre, there is no fixed notion of risk in financial markets, every investor has a different liability profile). Saying that you cannot make money from doing something (wrong), is not the same thing as saying it is the best prediction or that the market reflects all information or whatever (again, these are inherently unknowable statements). Btw, this is usually obvious when, unlike academics, you have to think forwards rather than backwards...there was lots of information inflation was going to rise, that is why a significant minority of people thought it was going to happen...the market didn't price this in, that is it. What happened is the perfect example of expectations not being well-grounded in reality...but ofc, circular logic of EMH: everyone predicted this, it was in the price all along.

gruez 5y ago
>What do you mean? There is no way to make it simpler because that is what it is: markets are not some kind of hyper-intelligent, sentient being. EMH doesn't claim this. >Right, and I am saying the logic used in that link is wrong (it is also circular...everything is always priced in, how do you know? Because the price says so... No, because if the price isn't priced in then someone can arbitrage the difference. >saying that seasonal patterns reflect risk is also bizarre, there is no fixed notion of risk in financial markets, every investor has a different liability profile no, but sharpe ratio (risk adjusted returns) is a thing, so risk is essentially fungible between different investors. >Saying that you cannot make money from doing something (wrong) what's wrong about not being able to make money from something? >is not the same thing as saying it is the best prediction or that the market reflects all information or whatever Only the strong form of EMH claims that the market price reflects all information on earth. I don't personally believe that, otherwise insider trading wouldn't be a thing. >Btw, this is usually obvious when, unlike academics, you have to think forwards rather than backwards...there was lots of information inflation was going to rise, that is why a significant minority of people thought it was going to happen...the market didn't price this in, that is it. Again, EMH (at least the non-strong forms) doesn't claim that it's accurate 100% of the time. The market can certainly be wrong, that doesn't mean it's the best prediction we have.

gruez 5y ago

>What do you mean? There is no way to make it simpler because that is what it is: markets are not some kind of hyper-intelligent, sentient being. EMH doesn't claim this. >Right, and I am saying the logic used in that link is wrong (it is also circular...everything is always priced in, how do you know? Because the price says so... No, because if the price isn't priced in then someone can arbitrage the difference. >saying that seasonal patterns reflect risk is also bizarre, there is no fixed notion of risk in financial markets, every investor has a different liability profile no, but sharpe ratio (risk adjusted returns) is a thing, so risk is essentially fungible between different investors. >Saying that you cannot make money from doing something (wrong) what's wrong about not being able to make money from something? >is not the same thing as saying it is the best prediction or that the market reflects all information or whatever Only the strong form of EMH claims that the market price reflects all information on earth. I don't personally believe that, otherwise insider trading wouldn't be a thing. >Btw, this is usually obvious when, unlike academics, you have to think forwards rather than backwards...there was lots of information inflation was going to rise, that is why a significant minority of people thought it was going to happen...the market didn't price this in, that is it. Again, EMH (at least the non-strong forms) doesn't claim that it's accurate 100% of the time. The market can certainly be wrong, that doesn't mean it's the best prediction we have.