Re: Investing

From: Rafal Smigrodzki (rafal@smigrodzki.org)
Date: Sun Jun 15 2003 - 09:09:51 MDT

  • Next message: Rafal Smigrodzki: "Re: Investing"

    ----- Original Message -----
    From: "gts" <gts_2000@yahoo.com>
    To: <extropians@extropy.org>
    Sent: Sunday, June 15, 2003 4:12 AM
    Subject: RE: Investing

    > The irony is that the market is efficient and unbeatable precisely because
    > only a tiny minority of people know it is efficient and unbeatable.The
    vast
    > majority of people are willing to devote time and energy in the pursuit of
    a
    > superior return. Their efforts ensure that such superior returns are
    > impossible, except by luck. It is because of their intense efforts to beat
    > the market that new public information is discounted immediately by the
    > market.

    ### This is such a deliciously convoluted, byzantine reasoning it's a
    pleasure to read. Relevant public information becomes discounted by the
    market only after the "vast majority of people" start trusting it - either
    because they understand their relevance or because the people they trust do.
    If you are faster to understand the information, e.g. if you understand the
    implications of a new diagnostic technique before others do, you can win.
    The most powerful example are venture capitalists - those who know which of
    the hundreds of petitioners at their door are cranks and which ones are
    geniuses, can reap 100% returns. And it takes a smart/knowledgeable guy to
    know a genius.
    -----------------------------------
    >
    > If people were to stop believing in the existence of market skill then
    > market skill might have a chance to exist. I don't see this happening
    > anytime soon. Humans are blinded by faith in their own intelligence. Those
    > who consider themselves to have superior intelligence are the most
    > vulnerable.

    ### The existence of arrogant ignorance does not preclude the utility of
    well-informed intelligence.

    Rafal



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