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Except some firms have made extraordinary profits by statistical analysis of Mr Market, eg Renaissance



They're not contradictory - markets are both short term and long term inefficient. Or at least they had been up to this point.

Note though that in both cases there's a rather convincing story that explains where the edge is coming from. In Buffett's case it's treating securities for what they literally are, in Renaissance it's having a whole lot of detected small inefficiencies and a model that can merge them intelligently, including estimates on how far each inefficiency can be exploited before your own actions price it out of the market.

There are even widely known edges that cannot be exploited, for example buying and holding real estate in a major city for the next 200 years is a guaranteed trade. But nobody who starts this trade will be able to live to complete it. Insurance is another one, one of the Bernoullis wrote a paper about it a long time ago. Given a sufficient wealth inequality / lack of competition one can exploit it forever.


All indications are that Renaissance is ~ market neutral, and are making money by predicting vol of buckets of individual securities based on statistical analysis and buying/selling baskets of options based on that.




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