Even if it had happened, the response would also have been different.
14,690 karma · joined August 2, 2012
Even if it had happened, the response would also have been different.
I agree more with your second argument, though that tends to be strained when the exploit is published.
I suppose there are edge cases where they will instead attempt to profit by convincing the board to pay the CEO a trillion dollars, but even that kind of thing probably only flies if the stock price is also going up. (I wouldn't have thought to include that exception at all some years ago, but at least one salient example has proven this possible, if not likely.) So I could see a case for not trusting the valuation of companies that behave in that particular manner. Where the CEO is effectively the controlling shareholder, especially if they have shown a willingness and ability to inflate their own compensation.
Now, it may be that the risk is one that other people care about but you don't. Some investors might be more sensitive to short-term volatility than others, for example. But a weak EMH can at least give a framework for thinking about these kinds of decisions. (Like whether to value tilt, for example. Or whether to invest in active or passive funds.)
It also gives you a framework to think about in which cases it is more or less likely to hold. Small, illiquid markets are the least likely to be efficient, in my opinion and experience. My only actively managed investment is in such a market.
Either way, the owners of a successful company are going to want to profit from it, which will make the shares valuable. Of course, investors know this, and so the share price tends to track current value of expected future earnings even without the company taking direct action to distribute profits.
If you really want to diversify away from the biggest growth companies you could try a value and/or small/value tilt. Those might all be good advice, but they do come with their own caveats, whereas using TSM instead of an S&P 500 fund is just good advice in general.
And I agree that without doing these things, some opinions are more likely to draw down-votes than others. TBH I indeed probably am more likely to down-vote a badly made point if it's one with which I disagree. But really, everyone should be doing these things, regardless of karma concerns.