Efficient markets work mostly only in theory. Traders and Investors that find spots to exploit market inefficiencies hold them as secretive as possible. Those market inefficient often also don’t allow high volumes of money. So its often closed private funds that truly discover and use such spots for years.
Open Investment funds often try to sell exactly this Idea, but they are more sales people that money managers.
Another problem arises if the smart money is too small to make a difference. E.g. in January many smart investors started to play the Covid-19 Spot. Longing companies like Zoom and shorting SP500. Zoom Stock went up immediately because that handful of smart money was enough to move the price. But the SP500 continued to make new All time highs since the hand full of smart investor money was laughable against the mass of auto invest strategies into the SP500.
Another distinction is that in Science participants go a long way to explain to the other party why their theory is superior, there is a direct incentive of recognition and contributing to the field. In Investing the truly smart money is doing the opposite they try to stay as secretive as possible. The public discussions about economics by Traders, Investors and Economist we often witness are either pure marketing for their fund(Traders/Investors). Handwaving reasoning (Economists).
Efficient markets work mostly only in theory. Traders and Investors that find spots to exploit market inefficiencies hold them as secretive as possible. Those market inefficient often also don’t allow high volumes of money. So its often closed private funds that truly discover and use such spots for years.
Open Investment funds often try to sell exactly this Idea, but they are more sales people that money managers.
Another problem arises if the smart money is too small to make a difference. E.g. in January many smart investors started to play the Covid-19 Spot. Longing companies like Zoom and shorting SP500. Zoom Stock went up immediately because that handful of smart money was enough to move the price. But the SP500 continued to make new All time highs since the hand full of smart investor money was laughable against the mass of auto invest strategies into the SP500.
Another distinction is that in Science participants go a long way to explain to the other party why their theory is superior, there is a direct incentive of recognition and contributing to the field. In Investing the truly smart money is doing the opposite they try to stay as secretive as possible. The public discussions about economics by Traders, Investors and Economist we often witness are either pure marketing for their fund(Traders/Investors). Handwaving reasoning (Economists).