Efficiency as “the market fully processes all information” is decidedly untrue.
Efficiency as “Its very hard to arb markets without risk better than a passive strategy” is very true.
Most professional money managers don’t beat the market once you factor in fees. Many private equity funds produce outsize returns, but it’s based on higher risk and taking advantage of tax laws.
Over time, positive performance for mutual funds don’t persist. (If you’re in the top decile performance one year, you’re no more likely to be there next year)
Despite all of this, there are ways people make money. But it’s a small subset of professionals. It’s high frequency traders who find ways to cut the line on mounds of pennies. It inside information from hedge funds. Or earlier access to non public information. But it’s generally not in areas that normal people like you and me can access.
Efficiency as “the market fully processes all information” is decidedly untrue.
Efficiency as “Its very hard to arb markets without risk better than a passive strategy” is very true.
Most professional money managers don’t beat the market once you factor in fees. Many private equity funds produce outsize returns, but it’s based on higher risk and taking advantage of tax laws.
Over time, positive performance for mutual funds don’t persist. (If you’re in the top decile performance one year, you’re no more likely to be there next year)
Despite all of this, there are ways people make money. But it’s a small subset of professionals. It’s high frequency traders who find ways to cut the line on mounds of pennies. It inside information from hedge funds. Or earlier access to non public information. But it’s generally not in areas that normal people like you and me can access.