Is warren buffet himself not an example of someone who has been able to consistently generate alpha?
I think this question is hard to comprehend when you blow it up to this massive scale. Heres a simpler (and I claim) equivalent problem.
Imagine you're in a room with a friend. You're both tasked with estimating the price of a company. You both read through the companies 10Ks and whatever other information you can dig up. You read a bit more carefully than your friend, and detect an issue in the company's finances. Now you have alpha, and can develop a better estimate.
The market is this same scenario, but there are millions of folks playing the same game. That means its harder to find that undiscovered blip of insight, but that doesn't mean it doesn't lie in wait for the diligent. Just as there are still original thoughts, there are still original insights, and possessing them means, for a moment, you can beat the market.
I think this question is hard to comprehend when you blow it up to this massive scale. Heres a simpler (and I claim) equivalent problem.
Imagine you're in a room with a friend. You're both tasked with estimating the price of a company. You both read through the companies 10Ks and whatever other information you can dig up. You read a bit more carefully than your friend, and detect an issue in the company's finances. Now you have alpha, and can develop a better estimate.
The market is this same scenario, but there are millions of folks playing the same game. That means its harder to find that undiscovered blip of insight, but that doesn't mean it doesn't lie in wait for the diligent. Just as there are still original thoughts, there are still original insights, and possessing them means, for a moment, you can beat the market.