On Tuesday, February 13, 2024 at 3:43:02 AM UTC+11, Fred Bloggs wrote:
> 'A market anomaly in a financial market is predictability that seems to be inconsistent with (typically risk-based) theories of asset prices.'
>
> People have made billions exploiting this phenomenon. AI will end that kind of opportunity in the near future.
>
> https://en.wikipedia.org/wiki/Market_anomaly

Dan Kahneman's "Thinking, Fast and Slow"

https://en.wikipedia.org/wiki/Thinking,_Fast_and_Slow

seems to be all you need. Markets reflect that fact that human beings make predictable sort of mistakes, but not reliably enough to let even artificial intelligence make money out of it. The evolutionary process weeds out people who are too predictable.

It hasn't weeded out Darius the Dumb yet, but it's only a matter of time.

--
Bill Sloman, Sydney

On Tuesday, February 13, 2024 at 4:43:49 AM UTC+11, Fred Bloggs wrote:
> On Monday, February 12, 2024 at 12:20:08 PM UTC-5, Anthony William Sloman wrote:
> > On Tuesday, February 13, 2024 at 3:43:02 AM UTC+11, Fred Bloggs wrote:
> > > 'A market anomaly in a financial market is predictability that seems to be inconsistent with (typically risk-based) theories of asset prices.'
> > >
> > > People have made billions exploiting this phenomenon. AI will end that kind of opportunity in the near future.
> > >
> > > https://en.wikipedia.org/wiki/Market_anomaly
> >
> > Dan Kahneman's "Thinking, Fast and Slow"
> >
> > https://en.wikipedia.org/wiki/Thinking,_Fast_and_Slow
>
> The only people making money using his methods is himself off book sales- as per usual with that kind of huckster.

He also got a Nobel prize for economics.

https://en.wikipedia.org/wiki/Daniel_Kahneman

He's more a respected academic than a huckster. What he sells is insight, which isn't always easy to value - and you aren't all that expert in evaluating it.

> > seems to be all you need. Markets reflect that fact that human beings make predictable sort of mistakes, but not reliably enough to let even artificial intelligence make money out of it. The evolutionary process weeds out people who are too predictable.
> >
> > It hasn't weeded out Darius the Dumb yet, but it's only a matter of time.
>
> It is possible to go about things systematically, involving quite a bit of complexity, to acquire enormous wealth from this effect.
>
> 'Medallion, (Renaissance Technologies) the main fund which is closed to outside investors, has earned over $100 billion in trading profits since its inception in 1988. This translates to a 66.1% average gross annual return or a 39.1% average net annual return between 1988 – 2018.'

As long as a lot of market traders are lemmings, it is possible to make a lot of money out of their more predictable reactions. The process bankrupts the more predictable ones, so it takes progressively more skill to keep on making money
> So to answer JL's question, some of them are quite rich.
>
> Then there's this subcult:
>
> https://en.wikipedia.org/wiki/International_Association_for_Quantitative_Finance

Sadly, it's a zero-sum game.
--
Bill Sloman, Sydney