Nope, that’s my point. MOST people putting money into stocks are NOT providing any information. They’re just buying a fund or following general rules that don’t deviate from aggregate measures or move any part of the market relative to others.
Those who are seriously attempting to BEAT the market are giving actual price signals about how their beliefs differ from the current average.
I think Yair is saying that the people putting in money randomly is what allows “beat the market” to be profitable. Isn’t the return on beating the market proportional to the size of the market? In which case, if more people put money into the prediction markets suboptimally, this would be a moneymaking opportunity for professional forecasters, and you could get more/better information from the prediction markets.
But all the people putting money into stocks, provide the market makers for the people with better information to make money.
Nope, that’s my point. MOST people putting money into stocks are NOT providing any information. They’re just buying a fund or following general rules that don’t deviate from aggregate measures or move any part of the market relative to others.
Those who are seriously attempting to BEAT the market are giving actual price signals about how their beliefs differ from the current average.
I think Yair is saying that the people putting in money randomly is what allows “beat the market” to be profitable. Isn’t the return on beating the market proportional to the size of the market? In which case, if more people put money into the prediction markets suboptimally, this would be a moneymaking opportunity for professional forecasters, and you could get more/better information from the prediction markets.