During discussion about things where you had strong opinions and then changed your mind, someone mentioned EMH. Do you believe in EMH and if so is it strong or weak version?
I used to believe EMH but not strongly. The pandemic changed my view because I managed to invest some money when the stock market dived and was clearly influenced by overly pessimistic view of the impact of covid. Some might argue that the market reacted to the irrational government measures, so it is not that the case that the market was mistaken. I still think that investors were equally irrationally pessimistic. I reject the view that this is a hindsight and I was merely lucky. I am not big expert and I did not possess any proprietary information. I had the same information as everybody else, I just didn't let my emotions take over me. This is further confirmed that even today when all the events have passed exactly as predicted, majority of people still maintain their mistaken views that covid was very dangerous to young and non-risk population.
It is the only time when I saw the rest of the society to be so wrong in their views and clearly this was my once-a-lifetime chance. I haven't see any other opportunities for easy money so far but I think that people who are experts in their fields and investors might have been able to find more opportunities.
One of them was found by Michael Burry who definitely saw that the 2008 financial crisis was coming. He wasn't just lucky because he had read and analysed all the documents and had to create special investment instruments to profit for it. In this way, it wasn't easily accessible by laypersons like me who have no time or understanding about investment. Again, most professionals were blinded by collective frenzy.
What is your opinion about EMH?
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Notes -
EMH is very close to true almost all of the time. How often do you think opportunities like the one you identified with COVID come about? How confident do you think it was reasonable to be that you would come out ahead? 80%? 95%? 99.5%? It's possible to come out ahead, just like it's possible to beat Stockfish in chess (AlphaZero did so) but you should generally believe that if you think you have identified, on your own, a better move, that you are wrong. Is it literally impossible? No, but it's not likely. Don't forget, the EMH refers to risk-adjusted returns: You can beat the stock market if you're willing to accept high risk. The only way to get a good grasp on what your risk actually is, would be to make more bets. Without knowing exactly what bets you made or when, I can barely even speculate on specifics, but I think you should seriously consider the possibility there were substantial risks you didn't consider and got somewhat lucky on.
Michael Burry is actually a good example--he faced ruinous amounts of risk and almost lost everything.
On the other hand, if you think that this was a once-per-generation opportunity, and wouldn't regularly make such bets, then that sounds like an agreement that EMH is true at least most of the time (or at least that identifying such opportunities is very hard, which amounts to the same thing).
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