Hacker News Reader

Comment by pencilguin | Hacker News Reader

Anybody who doesn't "disbelieve the efficient markets hypothesis" isn't paying attention.

NRGV ("Energy Vault") was trading at a $2.4B market cap less than a year ago, and are now at $0.4B, still radically overpriced. Their product was an obvious scam before, then they pivoted to another obvious scam. The only way their stock could have any legitimate value would be if they still had $0.4B in cash, and could be prevented from squandering it. All perfectly legal, apparently.

Same for fusion startups. (It is just barely possible that Helion could have value.) Kyoto Fusioneering builds equipment to use in fusion startups' sham demos, and provides a conduit for dumb VC money into the pockets of startup founders and VCs who invest in it. All perfectly legal, apparently.

View on HN

If you feel that the EMH is wrong to the degree that you're implying, you should go trade stocks on the valuable alpha that you apparently have.

"The market can remain irrational longer than you can remain solvent."

Irrational is contrary to efficient.

I know this is old now, but there are two possible answers here:

1. If you mean, "the market will not in fact go to the stock price that I think is correct in a time window that anyone can remain solvent for and perhaps ever," then what you are saying is you believe the EMH.

2. If you are instead saying that you are a small fish and big fish could play this scheme successfully, absorbing relatively small fluctuations, then, I mean, go pitch Jane Street in your brilliant approach of "look at the financials." (Obviously, you won't get anywhere because, spoiler warning, they already do this, and it's priced in).

Your conclusion in (1) does not follow. You don't know how long the price of (e.g.) NRGV will be irrationally inflated, so you cannot afford to bet on when it will collapse.

Your conclusion in (2) does not follow. Jane Street works on a time scale of, at most, milliseconds.

We may be sure that Berkshire Hathaway, which does operate on longer time scales, holds no NRGV shares.

Sure, Jane Street was the wrong example. A hedge fund, or as you say Berkshire Hathaway. But the point is, if you think that someone with deep pockets and somewhat long time horizons can reliably make money just by reading the publicly available financial information and making ordinary insurance from it, why aren't they?

And I think the answer that is confident with reality is, "actually, they do, and price in that information, such that there's no alpha left from it. Perhaps people with particular knowledge and expertise can synthesize that information with other knowledge to make useful predictions, but for an average layperson, is priced in."

Reply on news.ycombinator.com