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