The hottest Market Efficiency Substack posts right now

And their main takeaways
Category
Top Finance Topics

The Liquidity Problem

Points And Figures • 346 implied HN points • 09 Jan 24
💰 Finance Private Markets Investing Regulations Market Efficiency
  1. Carta attempted to tackle the liquidity problem of holding shares in private companies but faced challenges
  2. Creating a liquid market for private company stocks is difficult due to lack of buyers and sellers with aligned incentives
  3. Efforts to solve the liquidity problem might be more successful with digital programmable securities like security tokens

Where is peak ETF?

Klement on Investing • 1 implied HN point • 31 Oct 24
💰 Finance Investing Market Trends ETFs Index funds Market Efficiency
  1. ETFs and index funds are becoming more popular, but this raises concerns about how well the market works. If everyone just follows an index, new information might not affect stock prices as it should.
  2. Countries like the US and UK have a much larger share of ETFs compared to places in continental Europe. This difference could affect how investors approach the market in each region.
  3. Even though active investors help make markets more efficient, they might not gain more investor interest. Index funds could continue to grow, even if active management shows better results.

Only academics believe in efficient markets

Klement on Investing • 7 implied HN points • 04 Jan 24
💰 Finance Investing Market Efficiency Academics Behavioral Finance
  1. Academics believe in efficient markets where past news does not affect investment decisions.
  2. Non-academics like financial professionals and retail investors do change forecasts in response to old news.
  3. Real markets are not as efficient as academics think, incorporating psychology and fundamentals is important for investing success.

Retail investors and earnings surprises

Klement on Investing • 2 implied HN points • 07 Mar 24
💰 Finance Investing Retail Market Efficiency Stocks
  1. Retail investors often trade based on noise rather than fundamental information, impacting market efficiency.
  2. Retail investors tend to buy stocks with low price momentum and large earnings surprises, leading to market mispricing.
  3. Post earnings announcement drift is influenced by retail investors and can be seen in stocks with low institutional ownership.

Behavioral Corporate Finance 1: The Objective in Decision Making:

Musings on Markets • 0 implied HN points • 19 Jul 09
💼 Business Corporate Finance Decision-making Investor behavior Market Efficiency Finance Management Investing Corporate strategy Behavioral Economics
  1. Every business should have a clear goal for decision making. Traditionally, that goal is to make the company as valuable as possible, often by focusing on boosting stock prices.
  2. Behavioral finance points out that investors can act irrationally, which means stock prices might not always reflect a company's true value. Managers should be cautious about making decisions solely based on stock price reactions.
  3. It's essential for managers to aim for long-term value but also pay attention to market feedback. They can adjust their decisions to better connect with investors while still working towards the company's overall success.
Get a weekly roundup of the best Substack posts, by hacker news affinity: