News for hackers. Stuff that matters.

A comment on Being Slow to Criticise. Parent comment

Re:Being Slow to Criticise by taffer on Monday May 11, 2020 @09:14AM (#23141721)
> I believe he shows in that book it's not a very good approximation

But what does that mean? What is a good predictor of future returns and what is not? If markets are not, what is?

> the market wildly overshoots and undershoots actual returns

Well, the actual returns are only known retrospectively, but the current prices have to reflect all future returns. So, of course, current prices will always be wrong, that's not surprising at all.

[ Parent | on HN ]
Re:Being Slow to Criticise by TheOtherHobbes on Monday May 11, 2020 @10:18AM (#23142381)
You seem to be saying that current prices are always wrong, but less wrong than estimates of future prices based on current prices.

I have to admit to being surprised by this line of argument.

[ Parent | on HN ]