The battle: an efficient market and a TS with a positive maturity expectation. Who will win? - page 4
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it's like one neighbour walking into another neighbour's kitchen....
well, they finally started sharing knowledge......
about .... how does a spaceship.... goes into space???
and from the outside it looked very...scientific .... :)
"Efficient Market Theory". The basic idea of this theory is that NO ONE can outperform the market all the time. So why waste your time?"
Why try to outperform the market? Because it can be done all the time, and in the long term, it can outperform the market by a significant amount. Just look at how much money mutual funds spend on advertising: Not surprisingly, the basic idea that "financial professionals" are trying to get across to the masses is the idea of the individual investor as a helpless puppy and something of an anachronism in general. Only a very confident investor today would dare to storm the financial markets alone and resist the decreasing number of associates, the pressure of mutual funds and, occasionally, the media's attacks. The challenge for such an investor is to invest their own money, make their own mistakes, learn from their own experiences and enjoy the fruits of their own success.
Here is what academic researchers say: "Efficient market theory asserts that in today's market, where the distribution of information is close to perfect, no one market participant can get better information than another, and hence all stock prices reflect exactly what everyone knows. The only time prices change is when new information appears on the market. This information cannot be hidden in any way and is immediately available to all participants. Therefore, there is no point in trying to catch a good moment before others".
And what follows from all of the above? In particular where does it say that the market is a parasitic system absorbing money and not giving it away? Not even the inventors of the efficient market theory have thought of such nonsense (for the third time). They simply advocate investing in index funds, which will bring investors a stable and sufficient cacheflow, i.e. money from the market will go into the pockets of individual investors.
Before reading this newfangled nonsense, I recommend studying the basics.
I haven't read the whole thread, but I completely agree with what I've read.
About the market being a parasite.
Yes, the market does not produce anything by itself,
It only consumes money to maintain its infrastructure.
Does anyone disagree with that?
It is not nonsense.
And it performs at least two functions:
- it forms the price of goods by voting by a huge number of participants (voting with money)
- It redistributes money between market participants, from the less fortunate to the more fortunate.
About the market being a parasite.
Yes, the market does not produce anything itself,
it only consumes money to maintain its infrastructure.
In doing so, it performs at least two functions:
- It forms the price of a commodity by voting by a huge number of participants (voting with money).
- It redistributes money between market participants, from the less fortunate to the more fortunate.
Financial markets, by organizing financial flows , increase the efficiency of the entire economy. The financial flows go from those who have surplus cash, which they want to invest and earn extra income (like insurance companies and pension funds), to those who are short of cash, but need it to develop their production (any producer). All these people and companies benefit, they all get money. The USSR could not compete with the US also because it did not have developed financial markets, its economy in principle could not be as efficient as the US one.
The fact that small speculators (namely speculators, not investors) lose money is their own personal problem, it is their risk fee, they gamble in the hope of making a big score, some succeed, some not. But even speculators are not parasites, their role is important, they provide liquidity to the market, reduce its volatility. Successful speculators do it right and are rewarded by the market, those who do it wrong lose money and leave the market.
About the parasitic market.
Yes, the market does not produce anything itself,
It only consumes money to maintain its infrastructure.
Services to take money away from the majority and pass it on to the minority? Very useful services...
Successful speculators do it right and are rewarded by the market for it, those who do it wrong lose money and leave the market.
And how do successful speculators do this? Tell me more.
A trader cannot be successful all the time, one day he is on top and the next day he is broke - all because of the volatility of the market, its effective anti-adaptation to trading systems.
"Efficient market theory". The basic idea behind this theory is that NO ONE can outperform the market all the time. So why waste your time?"
Why try to outperform the market? Because it can be done all the time, and in the long term, it can outperform the market by a significant amount. Just look at how much money mutual funds spend on advertising: Not surprisingly, the basic idea that "financial professionals" are trying to get across to the masses is the idea of the individual investor as a helpless puppy and something of an anachronism in general. Only a very confident investor today would dare to storm the financial markets alone and resist the decreasing number of associates, the pressure of mutual funds and occasional attacks from the media. The challenge for such an investor is to invest their own money, make their own mistakes, learn from their own experiences and enjoy the fruits of their own success.
Here is what academic researchers say: "Efficient market theory asserts that in today's market, where the distribution of information is close to perfect, no one market participant can get better information than another, and hence all stock prices exactly reflect what everyone knows. The only time prices change is when new information appears on the market. This information cannot be hidden in any way and is immediately available to all participants. Therefore, there is no point in trying to catch a good moment before others".
And what follows from all of the above? In particular where does it say that the market is a parasitic system absorbing money and not giving it away? Not even the inventors of the efficient market theory have thought of such nonsense (for the third time). They simply advocate investing in index funds, which will bring investors a stable and sufficient cacheflow, i.e. money from the market will go into the pockets of individual investors.
Before reading this newfangled nonsense, I recommend studying the basics.
Try to imagine the market model. Let's assume that someone (a very large number of people) will take a lot of money from the market all the time - the market will cease to exist when the money within the market runs out. Hence the necessary condition for the existence of any market is a constantinflow of capital, a surplus of capital over the outflow of capital. The greater the difference, the better and faster the market develops. And this difference can only be and is only positive if the market is "efficient" (in the context of the theory of efficient markets).
The market doesn't create money out of nowhere. It flows out of traders' pockets...
Try to imagine the market model. Suppose that someone (a very large number of people) will constantly take a lot of money from the market - the market will cease to exist when the money inside the market runs out. Hence the necessary condition for the existence of any market is a constant inflow of capital, a surplus of capital over the outflow of capital. The greater the difference, the better and faster the market develops. And this difference can only be and is only positive if the market is "efficient" (in the context of the theory of efficient markets).
Forget the efficient market theory. It is not a scientific theory, it is a joke of intellectuals. This theory is not the backbone of markets, on the contrary, it is a minor minor accessory, a hairpin in the hair ofmarket theory.
Only in the mid-1950s and 1960s the postulates of the theory of "random walks" were accepted by the scientific community, as several economists came to similar conclusions: M. Kendall, M. Osborne, S. Alexander and P. Samuelson. On the basis of these conclusions, the nature of securities, peculiarities of their price interaction with information about them and the theory of an efficient market were reconsidered. To this day, the theories are still judged ambiguously, with renowned economists adhering to polar viewpoints.
An integral part of the investment analysis toolkit are various theories of market movement of shares - theories of stock market condition (Market Theories), using which a specialist can determine the best moment to buy or sell the securities. Let's review main points of the most famous theories.
Source http://www.rcb.ru/archive/printrcb.asp?aid=7181
An economist with world authority :) did not think that markets ( the stock exchange is a market - who does not know :-) ) are useful.