Re:Markets are efficient if and only if P=NP (2010)
by imtringued on Wednesday October 21, 2020 @04:38AM
(#24845919)
>The fact that it is possible to have a very successful career in finance as a quant or trader also seems to me like evidence the efficient market hypothesis (taken in its strongest form, that markets are perfectly efficient) is false.
It's the opposite. Traders increase market efficiency up to a certain point. If traders didn't exist then markets couldn't be efficient in the first place. Liquidity problems would persist and cause large spreads between buy and sell prices.
If you play chess against someone, and you discover a winning strategy, and you play it repeatedly, they'll eventually discover your strategy and be able to counter you. Your opponents in the market are adaptive in this same way, so trying to always stay ahead is very hard. Some funds find some way (which I am not privy to) to succeed at this, and people still make boat loads of money as professional traders or quants, so there is reason to believe it is possible.
The fact that it is possible to have a very successful career in finance as a quant or trader also seems to me like evidence the efficient market hypothesis (taken in its strongest form, that markets are perfectly efficient) is false.