3 ms·
I don't understand why people think everyone has access to the same amount of information and that the efficient market hypothesis holds outside an academic set
by codexon 12y ago
I don't understand why people think everyone has access to the same amount of information and that the efficient market hypothesis holds outside an academic setting.
In the real world insider trading is everywhere, and people pay big bucks to get data faster and trade faster than everyone else.
The main reason most people lose money on the stock market is because it is a zero sum game baring inflation, not because of EMH.
- Mikeb85 12y agoA significant amount is returned to the market through buybacks and dividends...
- codexon 12y agoThat money comes out of the company which came out of other people. It doesn't come from thin air. I know you can create "value" when currency changes hands, but we're talking about beating the average returns. And for someone to do better than the market, someone else will obviously do worse.
- Mikeb85 12y agoAnd it returns to the economy when those investors buy basically anything. Money will always return to the economy, except when people hoard cash (which is why inflation is key to our society - it reduces the value of cash and increases the money supply so that hoarding is a bad investment). > And for someone to do better than the market, someone else will obviously do worse. While it's true someone will do worse (especially when 'trading'), that 'worse' could just be a lower profit. After all, the stock markets do generally go up over time. Inflation helps, and of course economic growth too. One post isn't enough to explain the entire monetary system, however investing isn't a 'zero-sum' game...