Only kind of. The markets are equally influenced by supply and demand dynamics that have absolutely nothing to do with fundamentals. Popular stuff will tend to be substantially overvalued and unpopular stuff will tend to be overvalued. There are like 30 more examples of things that push valuations around that have nothing to do with anything underlying that valuation that I can come up with off the top of my head.

Bottom line is that markets may be trying to be efficient but they do a very poor job of that, and as a result of EMH executives can explain trading on their exit date away as 'maximizing shareholder value' instead of maximizing their own personal profit at the long term expense of the company, investors, employees, and literally every other counterparty they have.

Thinking one quarter ahead is basically the most toxic thing that has happened to corporate America in the last 100 years. It's so toxic in fact that it's a driving force behind why so many large companies today have no interest in being publicly traded. That and the SEC being able to **** with you basically at will lol.

EMH is a damaging lie on the same scale as 'Sugar calories are just calories', 'You're fat because you eat too much fat', and good old 'Cigarettes don't cause cancer'. Self serving crap served up by those who benefit the most from the idea. Yeah it's harder to see the negative impacts of EMH vs those other lies, but it has led directly to some really horrific things happening to bunches of real people.

It's really about time we all stop pretending like the financial markets have some special sophistication and wisdom vs the market for sweatpants.

Tooth is crushing this thread

Tooth,

I agree the root cause is a lack of competitiveness - The problem I have is that its an obvious outcome that almost every economy in the EU will be in the dumps aside from Germany – for a long long time. They cant do much about it...So France is tinkering with some labour laws - and these are seen as major concessions....its chicken****. The changes needed are dramatic. Might as well just adopt German constitution, labour laws, education system, tax code. Its not even close to being achievable.

It becomes philosophical. I say just let them have their central bank let them find their own way lazy, corrupt or otherwise. If they want to be inefficient so be it. Happiness doesn't necessarily correlate to efficiency or absolute wealth. Ive traveled a lot, and I would say it correlates best to employment, health care and housing affordability.

Oooh and about Japan I was talking specifically about the fact they are effectively monetizing debt and it hasnt negatively impacted inflation or exchange rates. People are starting to compare their debt situation to the US, and that has emboldened the spenders, right or wrong.

I guess the advantage of a floating currency is that it forces you to make your own stuff, by making the output of other countries more expensive. Basically forced protectionism and forced lower wages for that stuff you do export.

What if the world had a single currency - the Bitcoin? What would the world look like in your opinion? Would all of the useless countries (basically everywhere not owned and run by Westerners, Jews, or North East Asians) be even worse off? The logical conclusion of your ideas above seems to be that they would.

That quote isn't much to go on. But in an institutional setting, I too have seen new securities available at a steal. But getting something a steal does not imply arbitrage or inefficiency. New securities encase risk that not all investors are comfortable with.

If you say so?

The market is very dynamic. Risk appetite and yield requirements are always changing.

I'm a bit over my head with some of this stuff, I'll admit, but it seems that a GDP growth of 2% is considered optimal according some sources I've been looking up.

Intuitively, holding a debt sounds like a bad deal, but I'm not sure what the logic of it is, and I don't know of any proper "just right" amount of debt. I know I'm applying a classical logistical fallacy when I say the experts probably have this under better control than you and I would, but I would like to view the debt from a reasoned and logical perspective instead of an emotional perspective.

The world would be far worse off than it is today and I'm truly struggling to understand why anyone thinks otherwise.

Like so many anarcho-capitalism ideas, there are very strong corollaries, if not exact matches, to the concepts that are tossed about. The ideas didn't work in the past, they don't work today, and they won't work tomorrow.

welll...in that scenario the dominant countries crush it. thats for sure. whether or not the others fare ok is debatable. if they are screwed on debt then they are worse off If they have unfixable unemployment, worse off. if there are transfer payments and transfer of debt to soften the blow then maybe it could work. overall one currency would force ultimate efficiency, but its a painful process and so brutally efficient its inhumane.


I have seen it firsthand. In canada we have "have and have not" provinces. the haves pay transfers to the have nots, but it doesnt matter, the east provinces will have high unemployment regardless especially if the oil and gas industry is hot. If only we could take the oil and gas industry and give them their own currency....so they arent subsidized by the rest of the economy. the rest of the economy would be working. ITs the Dutch disease and we got screwed by it in 2014. US is more diversified dont think you havea problem

I think what happens in currency unions, is that the have nots become tourist industries. They never have a chance to compete in actual output because there are structural problems.. their citizens go to work in germany, and their economy becomes retirement in tourism income flowing the other way.

Risk appetite and yield requirements are just two of the non-fundamental things that can affect the price of a given security vastly more than they will affect the performance of the underlying asset.

If markets were efficient they would move tiny amounts every day depending on the status of that particular investment. Most days would be very very close to flat. IRL there's a massive ocean of ETF money raising the valuation of every stock in the index as rich people trade paper back and forth with other rich people at larger and larger numbers with money borrowed from financial institutions who in turn borrowed that money from the central banks who got it hot from the printers.

At this current moment in the market we are seeing an AMAZING example of how far from efficient markets can be. I'm not advocating a short because I stopped believing that rational valuation had anything at all to do with the stock market quite a while back. It's a nice indicator, sure, but it's pretty worthless without an obvious catalyst.

And this is why I don't argue with people about why 1+1=2. I end up getting tilted that they can be so ****ing stupid. So very very very stupid.

It takes a complete imbecile in charge to give up a central banks authority. I cant believe every eu nation signed up to get slaughtered by germany.

is not temporary. neverending unemployment in all eu countries not called germany. thx euro! they arent even close to being out of this mess. recession in 1-2 years they are alll in pain. thx euro

I know you know this has to be the worst way to form an opinion on an issue but I'll drop this issue because I don't think it's going anywhere. T

I'm genuinely interested and not trying any debate here. I admitted outright that I don't know. If questions offend you, that's your problem, not mine.

And what's the key driver of general risk appetite? It's fundamentals and perceived strengths and threats of the overall macro and global economy. And in a healthy economy, riskier assets become less risky and less volatile, regardless of how much its cashflow may improve.

What's a tiny amount? 2% max daily? 0.50% max? 0.00142%?

Sure, in a world were literally nothing changes.

Saying the market is a bunch a fat rich people wearing top hats trading money back and forth doesn't make you sound much different than the communists you hate arguing with. Monetary policy also does not disprove any part of EMH. Try again.

EMH, at least in its weak form, does not imply bubbles cannot form, or that markets 100% rational, or that risk appetite and sentiment can never shift. That's pretty silly. It merely states that all historic, public information is already baked into the price of an asset.

And I agree, in the very rare cases when markets crash, markets may offer arbitrage opportunities even to the average market participant, assuming the exchanges honor the trade. Though I'm not sure if that was the case last week.


Lol, you hardly put up an argument anywhere here. And I think I was right when I said most people misinterpret EMH. Bye.

I don't think he wants to discuss the issue? But you are right. The idea of markets being efficient --pricing in all available information means they wouldn't move much ("a tiny amount")...until an event happened.

Take TSLA, all available information is priced in and it trades flat until 12:30pm, then someone assassinates Elon Musk. Boom a binary event, and you get (under a perfectly efficient market) no phase transition, just a completely new state.

Or imagine, he is shot, TSLA instantly falls off, but he lives. But his health is slowly declining throughout the trading day...

Ceteris paribus that **** in your thought experiment.

For the record though, markets are not efficient, weak or strong. Price discovery is a combination of animal spirits and rational behavior...

Animal spirits and weak EMH are not mutually exclusive.

Sent from my SAMSUNG-SM-G925A using Tapatalk

That is true, but it doesn't make a defense of EMH right or my position wrong.

I haven't thought about this stuff in a while because I made up my mind almost a decade ago. But per investopedia's definition: https://www.investopedia.com/terms/w/weakform.asp the weak form is obviously wrong so long as a single trader takes a technical signal.

I would say that there is more than one trader out there that looks at trend lines and volume data, as well as other technical signals.

I can say for certain that there is at least one.

I really wish that I'd thought to add a public poll bec so far it looks 50-50 to me.

Howard,

Do you know the last time the US national debt was zero?

What exactly does 100% debt to GDP mean? We're literally handing every $1 of wealth created to some other nation? Does 50% mean 50 cents on the dollar? What about 200%?

It means the principle on the loan is the same as one year of GDP. When the yield on a 10 year treasury is <3% that's not a huge deal. Obviously it becomes a bigger and bigger deal the higher than yield goes.

My biggest complaint with the deficit and debt situation isn't that we're running a deficit, it's that we're running a large and growing deficit while the economy is booming. I worry that we will fire all of our ammo before the enemy is even in range and the resulting recession will be really ugly.

If we're going to spend a ton of money I'd like to see it spent on a broad rebuilding of our infrastructure rather than additional defense spending or tax cuts. But that's me. I'd also wait on that until the economy dips into recession and asset valuations return to a normal sort of place.

I realize that the credit markets and contagion mean that we'd have to pull the rip cord sooner than I'd like... and I am fairly concerned that if we keep fixing our debt problems with more debt we will eventually face a margin call. I guess we'll see how it all turns out.

Of course not and I won't bother looking it up either bec what good does it do it do me? The question is whether or not it's a problem now and there's a serious split on the answer which is likely how the politicians get away w/ running the debt up in the first place.

How is the current debt different from historical levels? 5 years ago? 20? 100? I would think these questions would be relevant to your concerns.

Yeah Howard needs to compare with the 90s.

It's economics which means it's full of idiots who can't do even basic analysis correctly. Howard wants a definitive answer. But the only definitive answer is this:

1. Most think some debt is good/desirable for the economy at lower levels
2. Most agree that excessive debt - from > 50% to > 150% of GDP - starts creating serious risks and issues and wealth loss.
3. People are divided on the severity of the consequences. I listed the consequences above in a couple of posts, including the hidden ones.

Generally, debt is sustainable and won't blow up if the economy is robust. Pain, where you need to start paying down the debt, can no longer borrow at reasonable rates, and kill your economic growth while enriching other countries, but don't go into Venezuela style inflation, happens long before Venezuela style problems, if your economy is robust. America has talented people and world-beating know how. You're not going to get Venenzuela type inflation. But your children might be poorer part-serfs, decades of growth might be destroyed, and world dominance might be ceded by too much debt.