Link: https://news.ycombinator.com/item?id=16517236 … I used to be a big believer in the weak form Efficients Market Hypothesis. I think these days I'm slightly more rigorous as to asking "Is this going to be one of those places where weak-form EMH fails to be a good heuristic?"
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You probably want an example of EMH failing. OK, here's one: Consider a software company which has accumulated 200~600 Smart Person Years of effort. I predict, quite confidently on the basis of running this experiment frequently, that I could price their product better.
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The reason that that is true is because the filters that a software company has to get to to accumulated 200 Smart Person Years include "charge money for your software" but do not, in most cases, include "Spent 6 hours thinking about your pricing strategy." It's nobody's job.
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There exist analogous situations in BigCo where it is not merely nobody's job to pick up the penny on the sidewalk it is, in fact, a department of peoples' job to detect defectors attempting to pick up the penny on the sidewalk and swiftly sideline them.
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Actually I prefer to hear more about examples or reasons how a single smart person working for a few hours outperform X,000 smart person years. I am reading that line in terms of startup outperformance, not so much investment outperformance
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+1 would love those stories
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We clearly need to stop using the term “smart people”.
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As index funds grows bigger, they can create a bubble. "bigger company gets more money (regardless performance)" logic sounds dangerous. However, it performed well last 50 years!
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