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If you read my post again, you'll see that it was not about the question if institutions can create a positive ROI by doing HFT.

It was about the question whether the market is inefficient enough for a person to create a positive ROI by thinking.



None of the people I know in finance work in HFT. There are tens of thousands of very smart people being paid billions of dollars to make hundreds of billions for their employers with their brain.


Why don't they invest on their own instead?


Because even if the expected outcome is positive it doesn't mean that it isn't risky at an individual level. Like you wouldn't gamble your house in a coin flip game even for a 2:1 reward.

I actually had one of my finance friend quitting his job to do it on his own, but he stopped after just 3 month because the level of stress wasn't worth the additional money he was making.

But again, nobody would higher so many smart people if the optimal move was not to play and just passively investing.


Why don't they make more smaller bets so the risk cancels out?


There's only so much information an individual can gather efficiently. If you just rely on your portfolio being as loosely correlated as possible, you are just passively investing.

If you want to actively invest, you need to spend a lot of energy understanding the business and industry of the company you are investing in. (And that's actually the theory behind EMH, that in aggregate the market makers have access to all available information, because they all spend a lot of efforts gathering that info. And the underlying theory is correct, EMH is just failing on the game theory part: nobody would bother spend energy to gather that info and make decision out of it if the market was already doing that perfectly).


Then your answer to my original question:

    Do you think a single person can rationally
    decide to invest their time into thinking
    about the stock market?
Is "No". In your experience, the market is not inefficient enough that a single person can make a ROI that is worth the opportunity cost of not working for someone else instead.


Nope, all I said that the only person I know who did it wasn't able to deal with the stress (the main takeaway of this particular story is that I wouldn't advise doing that when you have a lavish lifestyle with a big house credit and a family to feed all by yourself).




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