Is Market really efficient? This says no-

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smpatel
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Is Market really efficient? This says no-

Post by smpatel » Wed Jun 12, 2013 10:13 am

Bogleheads,

Many of our philosophies are based on market efficiency or the price getting reflected quickly hence active management is not logical.

However, news like this reveal a different side-

http://www.cnbc.com/id/100809395

regards,

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Re: Is Market really efficient? This says no-

Post by FafnerMorell » Wed Jun 12, 2013 10:26 am

The news would seem to indicate that markets are extremely efficient for any period of time longer than 2 seconds, and perhaps even 500 milliseconds. :happy

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Re: Is Market really efficient? This says no-

Post by Rick Ferri » Wed Jun 12, 2013 10:31 am

The market is more efficient than you or I will ever be.

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Re: Is Market really efficient? This says no-

Post by technovelist » Wed Jun 12, 2013 10:35 am

That depends on your definition of "market". :?
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Re: Is Market really efficient? This says no-

Post by rkhusky » Wed Jun 12, 2013 10:49 am

The article reinforces my belief that I do not want to try and compete with day-trading investing professionals by reading Money or Fortune magazines or tips off the Internet.

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Re: Is Market really efficient? This says no-

Post by daytona084 » Wed Jun 12, 2013 11:00 am

rkhusky wrote:The article reinforces my belief that I do not want to try and compete with day-trading investing professionals by reading Money or Fortune magazines or tips off the Internet.
Or watching CNBC!

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Re: Is Market really efficient? This says no-

Post by G-Money » Wed Jun 12, 2013 11:09 am

rkhusky wrote:The article reinforces my belief that I do not want to try and compete with day-trading investing professionals by reading Money or Fortune magazines or tips off the Internet.
Agreed.

And, regarding whether the market is efficient, I think it is. If it's not, why would well-heeled customers of Thomas Reuters pay gobs of money for the privilege of getting the information 5 minutes, or 5 minutes and two seconds early?

I get all of my information second- or third-hand. I don't tune into the release of particular data. I either read it in an article, or I read it on a forum like Bogleheads that often cites to an article. By the time information gets to me, minutes, hours, or even days have passed from when the information was actually "news." So by the time I could possibly react to news--assuming I had the knowledge and skills to properly react to it, which I don't--the news is already priced in and the movers and shakers are already onto the next bits of data.

I don't try to beat the market for the same reason I wouldn't try to beat Usain Bolt in the 100 meter dash. I don't stand a chance.
Don't assume I know what I'm talking about.

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Re: Is Market really efficient? This says no-

Post by smpatel » Wed Jun 12, 2013 11:12 am

I understand all replies but this do indicate the powerful people could exploit anomalies in many different ways to stay ahead of the general public (us). Now, this one is on the news but there could be other such anomalies which are not in the news.
Not every one plays by the same set of rules, I do believe though that US market is more efficient than foreign markets.

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Re: Is Market really efficient? This says no-

Post by richard » Wed Jun 12, 2013 11:22 am

Is there evidence that traders are consistently profiting from access to this not yet public information?

Only the strongest form of market efficiency denies one can profit from non-public information.

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Re: Is Market really efficient? This says no-

Post by Methedras » Wed Jun 12, 2013 11:24 am

Even if one assumes that the market isn't "efficient", this article still reinforces that you should take the same point of view as if the market were completely efficient. Specifically, that individual investors do not stand a chance at market timing when competing against high-freuqnecy trading organizations. They pay millions of dollars for IT infrastructure and access to data such that they actually can market time, and if you have similar resources to dedicate, then perhaps you can compete in the 2-60 second time frame where market efficiency is questionable and timing is possible.

However, for everyone on this forum, you might as well just stick to the plan.

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Re: Is Market really efficient? This says no-

Post by IlliniDave » Wed Jun 12, 2013 11:57 am

richard wrote:Is there evidence that traders are consistently profiting from access to this not yet public information?

Only the strongest form of market efficiency denies one can profit from non-public information.
I can't get to the article. I thought profiting from non-public information was something the SEC doesn't take kindly to. Obviously I'm missing something. Is the article discussing some sort of "gray area" around insider trading?
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Re: Is Market really efficient? This says no-

Post by Call_Me_Op » Wed Jun 12, 2013 12:00 pm

smpatel wrote:Bogleheads,

Many of our philosophies are based on market efficiency or the price getting reflected quickly hence active management is not logical.
Active management is only logical if the increase in return is not offset by the additional cost (trading and otherwise).
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Re: Is Market really efficient? This says no-

Post by FafnerMorell » Wed Jun 12, 2013 12:12 pm

It's news articles like this that prove the retail investor, buying S&P500-style index funds, has no hope of ever beating the advantages of elite hedge funds, paying for ultra-fast access to the latest info before it's available to the masses.

http://www.bloomberg.com/news/2013-05-2 ... -says.html

Of course, other news, like "Hedge funds gained 5.4 percent on average through May 10, compared with a 15.4 percent rise for the S&P 500 (SPX)" make you wonder what's going wrong with that 2 second head start (perhaps a bit like some of the cartoon versions of "Tortise and the Hare", where the Hare is so focused on cheating to assure victory over the outmatched Totrise, he winds up losing).

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Re: Is Market really efficient? This says no-

Post by hafius500 » Wed Jun 12, 2013 12:31 pm

Five minutes before that, at 9:55 a.m., the data is distributed on a conference call for Thomson Reuters' paying clients
Isn't this consistent with an efficient market because this information is -now- publicly known?
I assume there's always a high-frequency trader or a market-maker who frontruns the trades of retail or other professional investors because he has more information.
The traders who set prices must beat the market to cover their costs.

In a free market competitors will be willing to pay higher fees to get this information which means that the value of this information will decline and will be zero for most investors.
OTOH, it might be consistent with a free and efficient market to ban such practices. I don't know.
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Re: Is Market really efficient? This says no-

Post by Ged » Wed Jun 12, 2013 12:42 pm

FafnerMorell wrote: Of course, other news, like "Hedge funds gained 5.4 percent on average through May 10, compared with a 15.4 percent rise for the S&P 500 (SPX)" make you wonder what's going wrong with that 2 second head start (perhaps a bit like some of the cartoon versions of "Tortise and the Hare", where the Hare is so focused on cheating to assure victory over the outmatched Totrise, he winds up losing).
Speaking of cheating, I saw yesterday that the SAC fund, which is getting pummeled for insider trading has fees of 3 and 50.

The normal hedge fund fees of 2 and 20 are outrageous. I need a new word for SAC's fees.

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Re: Is Market really efficient? This says no-

Post by user5027 » Wed Jun 12, 2013 12:48 pm

scandalous

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Re: Is Market really efficient? This says no-

Post by magician » Wed Jun 12, 2013 1:45 pm

technovelist wrote:That depends on your definition of "market". :?
And on what form of efficiency you mean.
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Re: Is Market really efficient? This says no-

Post by nisiprius » Wed Jun 12, 2013 2:43 pm

I don't think the market is perfectly efficient. What I think is that I personally am not capable of exploiting its inefficiencies and that it is better for me not to try.

I believe that it is beneficial to me to invest a meaningful chunk of my portfolio in the total stock market, as represented by an index fund, less expenses, less trading costs, and less whatever "edge" some traders may or may not have over Vanguard (which is often thought to have a good deal of "transactional skill" of its own). I've always believed the game is rigged against me a little bit, but so what? If Thomson Reuters is doing something illegal, shame on the regulators for not stopping it. If Thomson Reuters is doing something that ought to be illegal, shame on the legislators. I can get all indignant about it, but it doesn't change what my investment strategy should be.

Is anyone saying:

a) "Thomson Reuters gives elite traders a 2 second head start.
b) Therefore, the market is inefficient.
c) Therefore, you should dump Vanguard Total Stock Market Index fund for Fidelity Magellan?
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Re: Is Market really efficient? This says no-

Post by richard » Wed Jun 12, 2013 2:51 pm

IlliniDave wrote:I can't get to the article. I thought profiting from non-public information was something the SEC doesn't take kindly to. Obviously I'm missing something. Is the article discussing some sort of "gray area" around insider trading?
The definition of illegal insider trading is much narrower than just profiting from non-public information.

Generally, to violate the law, you have to get information about a company from the company and use it in violation of a duty. In this case, the information is not about the company and recipients are free to use it (that's why they pay for it).

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Re: Is Market really efficient? This says no-

Post by staythecourse » Wed Jun 12, 2013 3:07 pm

I have said this numerous times, but the question to the retail investor is NOT is the market efficient, but is it inefficient enough to profit from. If you are Mr. Fama and have to rebut his original article then YES you care about semantics, but not I your like you and me. We should only care is the market inefficient ENOUGH to profit from the inefficiency over at least half an investor lifetime (25 yrs.) after costs, after taxes, and after inflation. If you think the answer is yes then one should go for active management and if not then you believe in efficient ENOUGH markets. Let the academics argue (which they will forever) about efficient vs. inefficient.

Good luck.
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Re: Is Market really efficient? This says no-

Post by classpro » Thu Jun 13, 2013 8:09 am

richard wrote:
IlliniDave wrote:I can't get to the article. I thought profiting from non-public information was something the SEC doesn't take kindly to. Obviously I'm missing something. Is the article discussing some sort of "gray area" around insider trading?
The definition of illegal insider trading is much narrower than just profiting from non-public information.

Generally, to violate the law, you have to get information about a company from the company and use it in violation of a duty. In this case, the information is not about the company and recipients are free to use it (that's why they pay for it).
Not true. There is O'Hagen misappropriation which does not involve getting insider information from the issuer, and there is tipper-tippee liability involving getting insider information second hand.

This is front running should be the llegal, but the exchanges are making money on it and the SEC is asleep (and getting bs from the profiteers about how it increases liquidity and is good for investors). 10b5 is based on the concept of a level playing field.

The efficient market theory is a bunch of nonsense. In the short term market prices are based on many factors with plenty of ignorance, speculation, and stupidity setting prices, along with copious amounts of insider trading. One hopes that in the long term fundamentals will predominate, but there are no guarantees. The sec should be doing much more to protect the integrity of the markets for long term investors instead of worrying so much about liquidity. All this volatility is bad for the long term health of the economy.

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Re: Is Market really efficient? This says no-

Post by Rick Ferri » Thu Jun 13, 2013 8:45 am

It doesn't matter if the markets are efficient or not. What matters is an efficient way to invest in the market, and that answer is with a fixed allocation to a diversified portfolio of low-cost index funds.

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Re: Is Market really efficient? This says no-

Post by bengal22 » Thu Jun 13, 2013 9:02 am

I think the main point is that the "market" takes into account all information much faster than we can. So because the market is more efficient(way more) than us, our belief that we can guess the direction of individual stocks before the market can is a fool's game. 8 monkeys with a dart a piece can forecast as well as we can.
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Re: Is Market really efficient? This says no-

Post by classpro » Thu Jun 13, 2013 11:59 am

I think it's silly to talk about a market like it was a single human being incorporating all public information and then making an investment decision so big that it cancels out all inefficient trading behavior. It's just a nonsense theory that people should stop pretending represents reality. The reality is that the market, which is based on large numbers of traders who have all kinds of rational and irrational reasons for their trades, reaches a clearing price which reflects nothing more than that. It is not an intrinsic value and is no more knowledgeable, "correct" or informed then the individual people making the trades.

If everyone suddenly adopted Rick Ferri's philosophy, I think, all stocks would move in tandem regardless of the underlying fundamentals. Is that right Rick? The reason prices don't move in tandem is that traders have different theories of valuation or whatever it is that causes them to trade. If everyone adopted Rick's philosophy, the market would not function as an allocator of capital. That doesn't mean his methods are not an excellent way to get people to save and invest, just that it's not THE only solution.

I'm very doubtful of a single investment method being right or best for everyone. My personal belief is that stocks are businesses, that people can make various estimates of a business's worth based on assumptions about the future, and because actual intrinsic value is over the long term incorporated to a large extent into investor's valuations, correct assumptions will be incorporated into stock prices. But it is not a perfect mathematical process. I also think that people can determine when valuations are historically high or low and decide to make higher allocations when low. I realize that uninformed people make exactly the wrong moves, and that Rick's method is far superior to buy high sell low. I'm a great fan of John Bogle's work. It's a good philosophy for many people. But I worry about turning an investment philosophy into a religion. We should not close our eyes to the reality of the market or to thinking more about how it works.

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Re: Is Market really efficient? This says no-

Post by smpatel » Thu Jun 13, 2013 12:29 pm

Isn't that someone said in a short run "stock market" is a voting machine and in a long run it is a weighing machine?

So, I think in a short run it does become inefficient from time to time, people/corporations with resources to exploit those short term opportunities could do so. During financial crisis, many stocks of strong companies suddenly fell big, does that make market efficient? I believe not, I believe it was an emotional response en mass along with computer trading otherwise how would someone justify many stocks suddenly become less valuable. Overall, what is P/E anyway, pricing something by definition is an estimate, could estimates be efficient? Not sure.

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Re: Is Market really efficient? This says no-

Post by entyrii » Thu Jun 13, 2013 1:12 pm

Perfect market efficiency requires that all market actors have perfect information and that there are no barriers to trading such as fees, taxes, etc. The market is not perfectly efficient, but it is very reasonably efficient. Certainly more efficient than you or I could ever hope to be at asset pricing, and, I suspect, even more efficient than the elites who have early access to this kind of news information. They might be able to make a few killer trades, but I'm very skeptical that even they could beat "the market" over a decades-long time horizon.
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Re: Is Market really efficient? This says no-

Post by classpro » Thu Jun 13, 2013 3:23 pm

I have a completely different view of the market. I think the market is extremely inefficient in almost every respect. There is an enormous amount of insider trading and information disparity. There is an enormous amount of false tips circulating through the market on a daily basis. There are highly regarded cooks, charlatans and snake oil salesman whose words are followed like gospel by large numbers of people. Have you ever listened to one of these technical analysts? Accounting information is highly manipulated and manipulable. Shareholders have almost no power, and corporations are run by imperial officers and directors answerable to no one. Traders do not have anywhere near perfect knowledge. I could go on and on.

I don't think market prices ever reflect intrinsic value (if there was a way to scientifically determine intrinsic value, and if a stock price ever lined up with it, it would be nothing more than a bizarre coincidence). The market's individual valuations on a daily basis are closer to random than perfect, and price movements have no logical connection to the changes in public information. Yes, it's a voting machine, but it's a voting machine with a very small number of shares participating in the voting at the margin, and large numbers of the traders on a daily basis are speculators. Then we add in artificial shares (shorts and other derivatives) and the voting gets further and further from reality.

Even though accounting information is highly imperfect, it does give us something, and stock prices do respond to changes in accounting information (although often very irrationally). But I don't share your confidence in either the integrity or accuracy of the system. The reason most stock picking schemes fail is because the market is so inefficient and irrational. A good fundamental analyst can be right, but it can take years for the inefficient market to realize it.

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Re: Is Market really efficient? This says no-

Post by richard » Thu Jun 13, 2013 3:41 pm

classpro wrote:
richard wrote:
IlliniDave wrote:I can't get to the article. I thought profiting from non-public information was something the SEC doesn't take kindly to. Obviously I'm missing something. Is the article discussing some sort of "gray area" around insider trading?
The definition of illegal insider trading is much narrower than just profiting from non-public information.

Generally, to violate the law, you have to get information about a company from the company and use it in violation of a duty. In this case, the information is not about the company and recipients are free to use it (that's why they pay for it).
Not true. There is O'Hagen misappropriation which does not involve getting insider information from the issuer, and there is tipper-tippee liability involving getting insider information second hand.
Note the word "generally" in my post. Acquisitions are a slightly different matter, but the basic analysis holds. O'Hagen got information about a potential transaction from an acquiring company in his role as counsel to the acquiring company and used the information in violation of his duty to that company.

In the typical tipper-tippee situation, the tipper is an insider of a company revealing information about the company in violation of a duty. The information can come directly from the company insider or indirectly through another party.

Here, Thomson Reuters is selling information about the economy to traders who will trade. No issuer confidential information and no violation of a duty.

Are you also disputing that the definition of illegal insider trading is much narrower than just profiting from non-public information?

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Re: Is Market really efficient? This says no-

Post by classpro » Thu Jun 13, 2013 4:16 pm

No, just disputing the statement that insider information has to come from the issuer. I agree that if the information was not received as a result of a breach of duty of confidentiality to someone (does not have to be the issuer), then it's not subject to insider trading rules (under Chiarella and Dirks).

I don't know enough about the Thompson Reuters case you're referring to to address whether they are getting their information as a result of a breach of duty to someone else, or even what the information is.

But with respect to HEF, I have no doubt that the SEC could under 10b-5, and should, prohibit it as a manipulative device. I'm not sure whether it's legal now. Who owns information about trades before the information has been publicly disseminated? Is it owned by the customers who placed the trades, or by the exchanges? If it's owned by the exchanges, then I suppose they can allow people preferential access to the information (unless it's prohibited by the SEC). But it's a lot like the "piggybacking" in the Martha Stewart case, where a Merrill Lynch broker gave Martha information about the Wacksal family's trades. It's different because Merrill had a confidentiality policy. Those policies are to protect customer privacy. If the information belongs to the customers or traders of the exchanges, then the early access might be misappropriation. But I'll admit it's vague.

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Re: Is Market really efficient? This says no-

Post by Rick Ferri » Thu Jun 13, 2013 5:48 pm

classpro wrote:If everyone suddenly adopted Rick Ferri's philosophy, I think, all stocks would move in tandem regardless of the underlying fundamentals. Is that right Rick?
That's not something I'll ever have to worry about in my lifetime, but generally, yes, this is true. There is already evidence in S&P 500 stocks. The correlations among S&P 500 stocks are higher than before indexing became popular.

A total stock market fund doesn't have this issue because it owns the market. Money coming out of one stock and going into another doesn't affect the value of a total market fund.

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Re: Is Market really efficient? This says no-

Post by Spirit Rider » Thu Jun 13, 2013 11:51 pm

The market is efficient over any appreciable period of time. This does not mean that there are not mispricing opportunities that happen from time to time.

Two recent specific occurrences come to mind. Larry identified to the bogleheads a TIPS mispricing over one-two week period roughly five years ago. Also, during the same general time period there was significant mispricing in the muni area caused by problems in the insurers and not necessarily the underlying issuers. This was raised by Warren Buffet, but he indicated that the opportunities were too small to benefit Berkshire Hathaway.

The problem is being able to reliably identify them when they occur and being able act on them. For example arbitrage is a low-risk way to take advantage of mispricing events. For small players, back when 0% credit card balance transfers with little or no fees, could be invested in principal protected locations. For larger players, the yen carry trade provided a similar mechanism.

None of these apply to the stock market, which is what most people think of when discussing efficient "markets". However, I know if we ever see I-Bonds with fixed rates > 3% again, I will be maximizing their purchase.

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Re: Is Market really efficient? This says no-

Post by nedsaid » Fri Jun 14, 2013 12:01 am

Isn't this illegal? Isn't this inside information? I am surprised that the SEC isn't investigating this.

Well, it shouldn't surprise me. SEC staffers spent time looking at nefarious stuff on the internet rather than regulating the markets. They also did nothing when a veteran investor went in and showed them on at least two or three different occasions that Bernie Madoff could not be making the investment returns he was claiming.

They really should look into this. This is outrageous.
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Re: Is Market really efficient? This says no-

Post by Ranger » Fri Jun 14, 2013 4:51 am

classpro wrote:I have a completely different view of the market. I think the market is extremely inefficient in almost every respect. There is an enormous amount of insider trading and information disparity. There is an enormous amount of false tips circulating through the market on a daily basis. There are highly regarded cooks, charlatans and snake oil salesman whose words are followed like gospel by large numbers of people. Have you ever listened to one of these technical analysts? Accounting information is highly manipulated and manipulable. Shareholders have almost no power, and corporations are run by imperial officers and directors answerable to no one. Traders do not have anywhere near perfect knowledge. I could go on and on.

I don't think market prices ever reflect intrinsic value (if there was a way to scientifically determine intrinsic value, and if a stock price ever lined up with it, it would be nothing more than a bizarre coincidence). The market's individual valuations on a daily basis are closer to random than perfect, and price movements have no logical connection to the changes in public information. Yes, it's a voting machine, but it's a voting machine with a very small number of shares participating in the voting at the margin, and large numbers of the traders on a daily basis are speculators. Then we add in artificial shares (shorts and other derivatives) and the voting gets further and further from reality.

Even though accounting information is highly imperfect, it does give us something, and stock prices do respond to changes in accounting information (although often very irrationally). But I don't share your confidence in either the integrity or accuracy of the system. The reason most stock picking schemes fail is because the market is so inefficient and irrational. A good fundamental analyst can be right, but it can take years for the inefficient market to realize it.
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Re: Is Market really efficient? This says no-

Post by hafius500 » Fri Jun 14, 2013 2:45 pm

nedsaid wrote:Isn't this illegal? Isn't this inside information? I am surprised that the SEC isn't investigating this.

Well, it shouldn't surprise me. SEC staffers spent time looking at nefarious stuff on the internet rather than regulating the markets. They also did nothing when a veteran investor went in and showed them on at least two or three different occasions that Bernie Madoff could not be making the investment returns he was claiming.

They really should look into this. This is outrageous.
All of the comments I read tell me it is absolutely legal.
E.g.,
Dealbreaker - Lots Of People Think Paying For News Should Be Illegal
Most Journal articles are available only to subscribers.” REALLY? You mean, people pay you, and you give them news that you don’t give to anyone else? News about mergers and economic policy and other market-moving stuff? HOW IS THAT NOT INSIDER TRADING ETC. ETC.
...
The fact that this is not insider trading is so obvious that it’s not worth discussing: the information here consists literally of asking a bunch of random people how they feel about the economy and then writing it down. It is as outside as information gets.5 It doesn’t become inside information just because you get it two seconds earlier.

CNBC - Thomson Reuters and Jumping the Gun on Wall Street
Trading on privately produced information is of course allowed. Hedge funds employ researchers to produce data about the markets. Wall Street banks can exclusively release reports to their brokerage clients. This is how it should be. The production of information about the economy, markets and companies is expensive and socially beneficial, helping investors price assets better. Because of that, we tolerate some unleveling of the playing field.
I agree and this (underlined) argument is consistent with my first reply.
But big picture numbers produced by Michigan and ISM are different. They are privately produced but quasi-official. Michigan is a state university, for one thing....
This is a political opinion. It's not a factual statement.

With regard to my first reply I ask: who is disadavantaged?
If we knew that some traders have the information five minutes earlier, wouldn't we stop trading five minutes before the information is published? This would eliminate the profitability of this trade. As I said, this is how markets become efficient.
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Re: Is Market really efficient? This says no-

Post by Dandy » Sat Jun 15, 2013 12:09 pm

Professionals have always had an edge - sometimes an illegal one. They often have access to vast analytical resources, high speed computers, access to company executives, sometimes visit company locations etc. They also seemed to have an edge in trade execution. This is just another advantage vs an individual investor.

Of course the edge has some costs associated with it so buying low cost broad based index funds is a way to somewhat neutralize the advantage for individual investors.

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Re: Is Market really efficient? This says no-

Post by nedsaid » Sat Jun 15, 2013 4:31 pm

I suspect transaction costs eat up a lot of the "advantage" of the advance information. There is the other thing that advance information is not always correct.

I remember Jim Cramer admitting publicly on TV that when running his hedge fund he used to spread rumors about companies to get a trading advantage. This is certainly on the border of legality and I wondered if he would get in trouble for his admission.

"Advance information" can be just rumor.

This also suggests that a lot of behavior on Wall Street is not necessarily ethical.
A fool and his money are good for business.

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nedsaid
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Re: Is Market really efficient? This says no-

Post by nedsaid » Sat Jun 15, 2013 4:50 pm

I think there are inefficiencies in the market but for our purposes as individual investors are efficient. Hedge funds are running into performance issues now and most of them have not recently outperformed the S&P 500. We also know that most managed funds cannot beat their benchmarks. So I would say that markets are efficient enough.
A fool and his money are good for business.

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Phineas J. Whoopee
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Re: Is Market really efficient? This says no-

Post by Phineas J. Whoopee » Sun Jun 16, 2013 11:57 am

[General comment self-censored.]

Ultra-low latency transmission of data for a price? Yes.

Ability to trade on otherwise-embargoed information for a price? No.

And it makes no personal difference to me as an investor because I can't complete a move in five minutes, let alone two seconds; and even if I could, I don't want to.

PJW

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Re: Is Market really efficient? This says no-

Post by classpro » Sun Jun 16, 2013 4:15 pm

If someone is profiting from this HEF or from information advantage then the rest of us are paying for it even though we don't know it. Since I don't trade much it probably doesn't cost me much directly, but it makes the markets more volatile and brings disrepute to the system, which costs everyone. The whole purpose of the sec is to prevent the perception that the markets are a rigged game. They are not doing their job when they allow this. They may not be able to do anything about the Thompson situation, but they can sure do something about the exchanges selling privileged access to exchange info and to limiting HEF transactions in general (as well as coordinated bear attacks).

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Re: Is Market really efficient? This says no-

Post by smpatel » Mon Jun 17, 2013 7:18 am

I agree with above comments. SEC could identify market movers or high frequency traders and make it illegal them obtaining information ahead of the market. I agree with all comments mentioning the limitations of individual investors to exploit these inefficiencies hence for them it is efficient but that does not make market efficient.
There were several previous posts where academic arguments were about dividend paying vs pure value strategies. It was mentioned that after the dividend paid the stock should reflect the price right away (if it is that efficient) but that is the theory, does it actually happen? In theory, we could sell the same amt of stock as dividend on the day we need money and no impact, I am not sure in reality that is doable due to these short term inefficiencies.

regards,

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