Close friend of mine, a regular software engineer, recently threw tens of thousands of dollars—a sizable chunk of his yearly salary—at futures contracts on some absurd theory about the Japanese Yen. Over the last few weeks, he coinflipped his money into half a million dollars. Everyone who knows him was begging him to pull out and use the money to buy a house or something. But of course yesterday he sold his futures contracts and bought into 0DTE Nasdaq options on another theory, and literally lost everything he put in and then some. I’m not sure but I think he’s down about half his yearly salary overall.
He has been doing this kind of thing for the last two years or so—not just making investments, but making the most absurd, high risk investments you can think of. Every time he comes up with a new trade, he has a story for me about how his cousin/whatever who’s a commodities trader recommended the trade to him, or about how a geopolitical event is gonna spike the stock of Lockheed Martin, or something. On many occasions I have attempted to explain some kind of Inadequate Equilibria thesis to him, but it just doesn’t seem to “stick”.
It’s not that he “rejects” the EMH in these conversations. I think for a lot of people there is literally no slot in their mind that is able to hold market efficiency/inefficiency arguments. They just see stocks moving up and down. Sometimes the stocks move in response to legible events. They think, this is a tractable problem, I just have to predict the legible events. How could I be unable to make money? Those guys from The Big Short did!
He is also taking a large amount of stimulants. I think that is compounding the situation a bit.
I feel like you know this is the case and I’m wondering why you’re even asking the question. Of course it’s a filter; the entire mating process is. Women like confidence, and taking these mixed signals as a sign of attraction is itself a sign of confidence. Walking up to a guy and asking him to have sex immediately would also be more “efficient” by some deranged standards, but the point of flirting is that you get to signal social grace, selectivity, and a willingness to walk away from the interaction.