2 ms·

> The interesting thing about markets is you generally can only make money when things are mispriced. Why would you think things are not terribly mispriced rig

• logicchains 3y ago
  >If only we were a lot smarter we'd know how. That's not true. Pricing and predicting in the real economy depends on information; for a given amount of information, there are vastly diminishing returns for further intelligence. Because intelligence only allows predicting a bit further in future, as the complexity of predicting the future increases exponentially with lookahead distance; it's O(e^n). This is why hedge funds pay for things like satellite footage of oil tankers to predict changes in supply.
• aeternum 3y ago
  Yes, things might be significantly mispriced, but the amount of mispricing is a finite quantity. This is clear in the classic pump and dump scheme. During the pumping stage, the unscrupulous actor loses money by injecting some amount of mispricing by purchasing the security and bidding up its value. The hope is to generate momentum and hype that triggers others to amplify that mispricing. Then during the dump scheme, the unscrupulous actor can capitalize by removing the mispricing.