From Morgan Housel on twitter.
Efficient markets?
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Will the market reach equilibrium before I can buy all the new paperbacks and sell them used for a profit?
Morgan’s Twitter link should be: https://twitter.com/morganhousel
It will. As a matter of fact what we see here are ask prices. We don’t see bid prices. The arbitrage would be there if the ask price for new books was lower than the bid price for used books
Ask quotes need not be “rational”, especially in such a thin market, do they? Only thing that matters is the execution price.
+1. This is interesting, but if the prices do not represent market transactions, there is no contradiction. Just like silly Amazon items asking for $9999.99. Still, it makes you wonder why the pricing algorithm does not track the New item price. I assume they are automated and not manually changed.
Of course many “used” copies are actually new, unread copies sold by third parties. Some may be remaindered. Amazon cannot suppress these algorithmically without stepping on the price of collectible books.
The fact there are zero reviews implies markets are efficient, but if someone bought the book believing that it would prove they aren’t. Classic Catch-22 makes me want to leave by the emergency entrance.
The used books are worth more, one is autographed by one of Ang’s graduate students, and Morgan Housel jerked off into the other so you can sequence his DNA from it.
File under: ‘Speculative’
I think markets are efficient. Why would I spend $75 on a book on investing? It recommends the best brands of darts?
It’s a required textbook maybe?
“It’s a required textbook maybe?”
Probably given the outlandish prices charged for text books these days. alternatively, one can download all of Warren Buffett’s letters to shareholders of Berkshire Hathaway and learn more.
Well said, sir.
The offer is still there: https://www.amazon.com/Efficient-Market-Theory-Evidence-Implications/dp/1601984685/ref=sr_1_1?ie=UTF8&qid=1497953690&sr=8-1&keywords=the+efficient+market+theory+and+evidence
2 sellers have an even lower price compared to Amazon for the new book. Perhaps Amazon cut their price to match the lower ones, but the others have not an automated way to do this.
I’d borrow it from the public library. I imagine I’d find it in the “New Books – Science Fiction” stacks.
Question: Can a rigged market be efficient?
In a word.
It’s nice to know about this, as a trader, I believe we got to stay aware of everything in order to succeed. And, it’s ever easy for me through broker like OctaFX given their outstanding set of features and facilities with small spreads at 0.1 pips for all major pairs, fast execution, deposit bonus up to 50% that’s usable plus much more, it’s all outstanding and helps up in working for me. I also feel great with their day to day market reports.
Indeed, Ricky. As a typical customer, I’ve found that OctaFX offer a great service. 10/10 would arbitrage again.
$9.82 for highlighting services. Could be a good deal if they highlighted the right stuff.
Even I found that funny.
Obviously the market is telling us that used books are worth more than new books.
The marginal notes of readers serve as an epiphany to an otherwise turgid text.