Does consistent alpha contradict efficient markets
Is the consistent generation of alpha by a PM a market anomaly, or at least a contradiction of market efficiency? I know it's not strictly an 'anomaly' by the definition of the term ('a price change which cannot directly be linked to current info or release of new info'), but doesn't the existence of AT LEAST 1 consistent alpha-generating PM be able to refute efficiency?
Warren Buffett that FA works, amongst others who have generated consistent abnormal returns thru FA, i.e., Peter Lynch, Bill Ackman, Howard Marks etc. Or is the explanation going to be the coin flip survival of PMs argument (pure luck, if u flip a coin half of PMs will get things correct, etc etc). How does that argument even tie into efficiency?
We know that in the semi-strong form of efficient markets, FA is useless, will not generate abnormal returns and is a less attractive option than passive investing after risk adjustments. So doesn't that mean if we can find 1 successful FA investor, this argument is refuted?
What makes markets efficient?
Is it random apes getting stock to go to the moon or people like Buffett doing FA on stock and moving the market through their actions? Alpha generation is a part of the efficient market because it’s what makes it efficient. Market is not always efficient 100% of the time but it generally is over a long period of time.
People doing FA and generating alpha is what makes it so that people buying broad ETFs can have pretty efficient ETFs and not half garbage in the S&P.
what i can say is that many apes pumping a stock to the moon (herding) doesn't necessarily mean inefficiency - cuz prices will correct themselves via sophisticated investors shorting the inflated valuations
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