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?
Jump in the discussion.
No email address required.
Notes -
There's definitely some nonsense in TA, but bundling only the bits you don't like and discarding it as "technical analysis" while leaving in the other stuff as "quantitative analysis" seems like cherrypicking. In any case, no matter what you call their strategy, some firms and individuals have long-run success in intraday trading which is a pretty clear indication that even the weak version of EMH doesn't always hold.
May it be that intraday trayding is profitable because the market is overall bullish? Are they still profitable in a bear market? Or do you have any kind of proof that they are beating the market? To reuse this comparison, in a bull market you can trade with astrology and still make money. Still genuinely asking, I'm seriously interested to know.
I'm not sure of the exact performance of any particular fund or investing house, but the general consensus I've seen is that hedge funds, especially short term ones, typically beat benchmarks during sideways or downward markets, but underperform benchmarks during upswings.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link