“I built a better model of Google’s future profits than the market” is a hard sell. “I found a factor the market isn’t properly accounting for” or “I got this news and figured out what it means before the market could price it in” is still a tough sell – it’s Google – but it’s less impossible.
So, there’s something very basic regarding markets I’m confused about. If there’s information about google that a substantial fraction (but not all) of the market knows about, how does that get factored in?
I have a model where, if you have a unique insight, and you know it’s a unique insight, then you just straight up get to make money, through buying/selling according to which direction your unique info suggests. Then, if there’s a world where an insight is public knowledge, there are quants whose job it is to be the first to factor it in / buy or sell accordingly. But if it’s only some fraction, how do you know if someone else has factored it into the market first?
So, there’s something very basic regarding markets I’m confused about. If there’s information about google that a substantial fraction (but not all) of the market knows about, how does that get factored in?
I have a model where, if you have a unique insight, and you know it’s a unique insight, then you just straight up get to make money, through buying/selling according to which direction your unique info suggests. Then, if there’s a world where an insight is public knowledge, there are quants whose job it is to be the first to factor it in / buy or sell accordingly. But if it’s only some fraction, how do you know if someone else has factored it into the market first?