EFFICIENT MARKETS?

>>1548906
The efficient market hypothesis says that the value of the company has already been determined by the market and therefore Warren Buffet doesn't exist.
It's obviously not true.

>>1548906
bruh glad you enjoyed the sweet meme i posted

>>1548906
Buffet is an outlier, you can't beat the market consistently

>>1548956
Warren Buffet can.

>it's like winning the lottery
Then why can he do it consistently?

>>1548906
If the market was efficient, Nintendo wouldn't have gone up by +100% in July over a game they didn't make, when it was fucking public information that they didn't make said game.

There's strong (markets know private and public info - insider info can't be used, strong case against SME), semi-strong (markets know public info - most likely scenario irl) and weak (markets know prices - technical trading is useless) market efficiency.

>>1548906
Yes it's true, especially in the Information Age. Although sometimes the collective knowledge of the market is wrong, we're only human afterall.

As long as humans are making decisions the market will never be 100% efficient.

>>1548906

There are many factors that will escape your technical analysis regardless of how good you are.

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>the market price is always right
>except when it isn't
>but nobody ever profits from that inefficiency
>except when they do
>therefore the market is efficient

>>1548906
EMH is bullshit. Market price reflects the market's analysis of available information. Analyses can be flawed, and if your analysis is better than the market's then you have an edge; see the medallion trust.

>>1550631
>medallion trust
Medallion fund sorry, it's 7am here.

>>1550631
>Analyses can be flawed, and if your analysis is better than the market's then you have an edge
and if it's worse, you trade with a handicap. To assume that you're analysis is better than the markets is the fallacy that's stopping you from seeing the truth.

EMH is a macro concept. It was never meant to define every single transaction -- It describes the markets as a whole. It never claimed to predict the results of every trade made by every individual trader -- It predicts the sum of their trades over any statistically meaningful period of time.

You might beat the markets, sure, in the short term. Just as you might correctly call a coin flip 2, 3, even 5 times in row. But keep flipping and the odds will even out. It's inevitable, and it proves that your earlier guesses were nothing bt dumb luck.

>>1549080
>Then why can he do it consistently?
Buffett isn't a stock picker. He does M&A transactions. He acquires control positions in companies, enforces vertical and horizontal integrations, asset liquidations, and efficiency optimizations. He is not a buy a hold investor.*

You cannot do what Warren Buffett does because you don't do what Warren Buffett does.

>*Approximately 10% of BRK's revenues are from stock trading activities. So, admittedly, its not actually zero. But its certainly not a material part of their enterprise.

>>1550648
>You might beat the markets, sure, in the short term. Just as you might correctly call a coin flip 2, 3, even 5 times in row. But keep flipping and the odds will even out. It's inevitable, and it proves that your earlier guesses were nothing bt dumb luck.
Pls explain the medallion fund

>>1550664
>medallion fund
Easy. If a million people try to call coin flips for a million years, one of them is going to get an incredible, seemingly "impossible" string of correct guesses. That's the way statistics works (especially when, to beat the market, you don't need to guess 10/10 correct, only about 7/10).

The fact that you can only point to one (or maybe a handful) of people who consistently beat the market proves that you're simply looking at a statistical outliar.

https://en.wikipedia.org/wiki/Exception_that_proves_the_rule

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>>1550675
>Beating the market is like calling coin flips, you can't do it consistently
>But some people can do it consistently and will never stop doing it consistently, and that proves that nobody else can

>>1550675
>If a million people try to call coin flips for a million years, one of them is going to get an incredible, seemingly "impossible" string of correct guesses.
But if one man steps up with his coin and flips 100 heads in a row first go then common sense dictates he's got a rigged coin.

You can call it what you want but if they've been getting 35% annually since 88 I'd say that's a sufficiently long period of time to say it's not just random chance.

The question I have is, how long would satisfy you? 100 years? 1,000? Or would you just say that the fund is incredibly lucky no matter how long it's successful for? If that's the case then I'd suggest that your position is unfalsifiable since no amount of success will ever convince you it isn't just luck.

>>1548906
Efficient markets require rational actors. Humans are not always rational, therefore markets diverge from this model at times.

>>1550678
>you can't do it consistently
I know you probably not very bright, but I didn't say that. I said that over a statistically significant number of trials, the odds will even out. Eventually, in the case of coin flips, you'll go to 50-50%

Fortunately for even retards like you, the markets have an inherent positive bias. The markets tend to go up (by approximately 10% per year, on average) due to maco-economic influences (GDP growth, population expansion, technological advancement, etc.). So in the stock market, the equilibrium point is closer to 6/10. So in order to beat the market, you've got to hit 7/10.

Of course, you're also paying for the privilege of playing, through commissions, fees, holding costs, margin costs, and deflation of your accounts while your looking for the next moonshot. So, in reality, you need to get 8/10 to beat the market.

Now you can begin to see the problem. Getting 8/10 correct isn't impossible, of course. But the odds are stacked against you. And while you'll find some winners if you look at enough coin-flippers and limit the testing periods, eventually math imposes its will on everyone.

If the average stock-picker American starts making investment decisions around age 22 and continues until their death at the average age of 78, that's 56 years of coin-flipping. Think you're going to hit 8/10 over that 56-year investing career? Well, you can dream....

>>1550712
>Efficient markets require rational actors. Humans are not always rational
Two irrational actions can cancel each other out. Now play that scenario with a few billion irrational market participants.

But more importantly, even if market inefficiencies exist, you have to find them, in time, to make money on them.

EMH doesn't say that 100% of markets are 100% efficient 100% of the time. EMH says that markets are efficient in the long-run, and that the inefficiencies are so small and so random that no actor reliably profit from them after deducting the time and expense of trying.

It's easy to attack a theory when you blatantly mis-state it. It's called a "strawman argument" and it makes you look like an idiot to every intelligent person in the room.

>>1550729
It's like beating a dead horse dude but you're a good man for trying. I think statistics should be more heavily taught in high schools.

These tards need more Bodie, Kane, and Marcus in their lives.

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>>1550729
>Picking stocks is literally flipping coins, the odds of making money are exactly 50%
>Stocks are never undervalued
>All exceptions to these rules are proof that I'm right

>>1550686
>You can call it what you want but if they've been getting 35% annually since 88 I'd say that's a sufficiently long period of time to say it's not just random chance.
And the fact that only one fund in the history of global markets claims such a performance record tells me the exact opposite. Unless you can point to something about this fund that makes it different from any other fund full of smart, hard-working money managers with nearly unlimited resources, the only logical conclusion is that they were, in fact, lucky. Or that they cheated.

Either way, it wasn't skill, which is the point I'm making.

>>1550743
>the odds of making money are exactly 50%
Um, I literally just said otherwise. Did you miss the part about the 10% inherent positive bias? Or are you too stupid to understand it?

If it's the latter, and you ask politely, I'll do an ELI5 for you on positive market bias.

>Stocks are never undervalued
Again, I literally just said the opposite. There are inefficiencies in every market, all the time. But when they're too small and its too expensive in time, money, and resources to exploit them, then it's the function equivalent of efficiency.

Please stop being stupid. Please.

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>>1550756
>Value investing doesn't work

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biz lives in 70's still

There are some documented anomalies that contradict the EMH such as momentum effects, overshoot and corrections, P/E ratios, Fama-French. But in general it holds up.

Identifying minor information advantages and capitalizing on them, given that human analysts and computer algos are constantly scouring for them, is nearly impossible for the small-time investor.

Pat yourself on the back for your good six months of trading I'd you must. But after 40 years in the markets, the mom and pop indexers will have you beat.

There's no get rich quick scheme. Get educated, get a good job, INCREASE YOUR INCOME, and shovel into index funds or etfs.

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>>1550759
>Value investing doesn't work
Value investing works when it works, and doesn't when it doesn't.

EMH doesn't have a thing to do with vilifying or glorifying any particular asset class. Every asset class has its place in a well-constructed portfolio.

Remember what I said above about you stopping being stupid? Now would be great time to start. M'may?

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>>1550770
nearly impossible but not even close. in japan couple of nintendo pros took over the market with 40% of nikkei daily volume, beating banks like goldman sachs on a day to day basis. if you have capital under few millions t's very easy rolling

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>>1550772
Whatever you say, pal.

>>1550675

This is always the first argument coming up against stock pickers, but let's suppose you did the same thing with a million gorillas, and 5 percent of the gorillas flip it right 9 out of 10 times ... that's an incident, right? But what if 90 percent of these statistically lucky gorillas come from the Cinncinati Zoo?

You have to look at other factors and correlations, man. Some gorillas will incidently flip it right way more times than the average gorilla, and these gorillas will "incidently" come from a specific group.

>>1550893
If there was some pattern that identified successful stock pickers, I'd love to hear about it. With further research and validation it might earn us a Nobel Prize in Economics.

I've already acknowledged there are lucky stock pickers. Some are Wall Street professionals, some are 18-year-old Japanese NEETs, some may even be in this thread. The only commonality they share is their lack of commonality. That's how random numbers work.

So, no, you can't derail the discussion by positing, "what if there was a pattern?" when there is, in fact, no pattern to discern.

>>1550924
He's talking about Jews.

>>1550929

Actually no. But I still think that their commonality is not merely that they don't have one.

There were, and are, dedicated people with fresh ideas that will consistently beat the market, all belonging to a special breed, who will outperform. And when the market finally catches up, they'll have the next brilliant idea. AW Jones is a good example. And there were many more in his likeness.

It's not about the stock picking itself, more about the person doing the picking. But I guess bitter 4channers can't understand.

>>1550959
You are literally using the same weasel words that /pol/ uses when they try to be subtle about their belief in a Jewish conspiracy.
So who are you talking about if not Jews?

>>1550962

Read up on some early hedgefunds. Incredible stuff. I'm not envious, I'm in awe. These people aren't succesful by chance. You can doubt their moral all you wan't, they did not sit on their ass and do nothing.

AW Jones was ahead of the market for decades. And others after him, too. But not by coincidence. You maybe can't pin down their exact commonality, but you can't deny that they don't share something. And no, it's not jewish ancestry.

>>1550971

whoops double negative, meant you can' deny that the share something by chance.

>>1550959
>fresh ideas
>a special breed
Very scientific. /s

Keep on worshiping lottery winners. It's a great way to justify your own failures.

>>1550971
>>1550976
So what the hell is it?
Just say it.

>>1550998

I won't cite every single on of them, read it up for yourself. Jones invented hedging, Steinhardt made big bucks with arbitrage before anyone else, etc.

I'm justifying shit. You just sound like someone so eaten up by bitterness that you won't admit that there are people better than you, and it itches you that it may not have been "pure luck".

The entire concept of EMH depends on what kind of definition of "efficient" you want to use.

>>1551005

I mean these fucking hedgefunds, dude.Most of them nowadays are trittbrett drivers, but the earlier ones were brilliant guys, not a random group who were at the right place to the right time.

>>1551014
Eh sure but you're being pedantic

>>1551011
And you sound like someone desperate to believe in superstar investors, perhaps because you hope to emulate them.

Look, kid, I get it. Everyone dreams of winning the lottery. There's nothing wrong with having an active imagination.

But when you start thinking that there's some skill involved in picking the winning numbers, then you've jumped over into the land of delusion and denial. Not a good mindset for making sound financial decisions....

>>1551043

What's wrong with hoping, one day maybe? Dude you don't need to teach me. I know shit about the market, and my means are microscopical.

The big trades of people like Icahn and Buffett never blow because these guys don't anticipate the market, they move it. And even the smaller smart guys had more than I probably will ever have, the education, the connections, the capital to trade their ideas, etc.

Look, I didn't mean to offend you .I just think you should reassess your sight on the outliers. My stance is that they are a homogenous, at least more homogenous than you think, which puts the argument of "no commonalities" at question.

>>1551060
>What's wrong with hoping
Because spending your money on lottery tickets means you're not investing your money in sound, provable investments that will safely and steadily grow your wealth over the course of your investing career.

>my means are microscopical
That's not an excuse to do foolish things with your money. If you're unhappy with your financial circumstances, lottery tickets (stock picking, day trading, forex, cryptocurrencies) aren't the answer. The answer is to (a) maximize your wages/salary consistent with your talents and intelligence, and (b) invest that income in proven sustainable market-based investments.

>>1551017
Is the commonality that they're smart?
You're not making any sense and it just sounds like you're talking about Jews again.

>>1551105

My point was to say that I don't think that these outliers are merely a statistical phenomena. I never said you should try to invest like them, or emulate them. That's just your assumption.

Of course, there are fools trying to do this, actively burning money by doing so. But whoever these poor guys are, I'm not one of them. I'll just by my etfs. But that has nothing to do with our argument.

To be honest if that's your cncern you better move to these robinhood guys and educate them.

>>1550745
>only one fund
Not only one fund, it's merely the most successful. Again, what would you consider a statistically significant period of time? How many billions do they have to make before the probability of it being luck is <50% for you?

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>>1551504
The markets are efficient because the efficient market hypothesis says they are, and the efficient market hypothesis must be true because the markets are efficient.
Therefore anyone who makes less than infinity dollars per year should've just invested in an index fund.

>>1551504
I'll leave the math to the guy that won a Nobel Prize.

https://www.dimensional.com/famafrench/essays/luck-versus-skill-in-mutual-fund-performance.aspx

As soon as you're ready to disprove that, publish your article. Then we can talk. Thanks!