None of this actually invalidates the intended point: it only takes a small fraction of investors to remove an opportunity.
If the opportunity is actually market-beating, then those who notice it will gain capital over time, relative to those who don’t. The opportunity won’t disappear right away, but it will be removed eventually.
Obviously if those who notice an opportunity don’t find it worth exploiting, then the opportunity will persist. But it’s still true that it only takes a small fraction of investors actually exploiting the opportunity to remove it.
We do need more than just one exploiter to remove an opportunity. Some may stop sometimes, but there should be an equilibrium in which the opportunity yields just enough that people bother to exploit it. At that point, the market is efficient.
If an opportunity can’t actually be executed, then it isn’t an opportunity. It’s just a pattern in the data.
Overall, I’d say even if an inefficiency is publicly known, it usually takes a non-trivial amount of people*effort to remove all of it.
Bear in mind that when we talk about “removing” an opportunity, that doesn’t mean zero dollars can be made off of it. It means that the benefit from the opportunity does not exceed the opportunity cost.
None of this actually invalidates the intended point: it only takes a small fraction of investors to remove an opportunity.
If the opportunity is actually market-beating, then those who notice it will gain capital over time, relative to those who don’t. The opportunity won’t disappear right away, but it will be removed eventually.
Obviously if those who notice an opportunity don’t find it worth exploiting, then the opportunity will persist. But it’s still true that it only takes a small fraction of investors actually exploiting the opportunity to remove it.
We do need more than just one exploiter to remove an opportunity. Some may stop sometimes, but there should be an equilibrium in which the opportunity yields just enough that people bother to exploit it. At that point, the market is efficient.
If an opportunity can’t actually be executed, then it isn’t an opportunity. It’s just a pattern in the data.
Bear in mind that when we talk about “removing” an opportunity, that doesn’t mean zero dollars can be made off of it. It means that the benefit from the opportunity does not exceed the opportunity cost.