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Davidmanheim comments on Open thread, Aug. 10 - Aug. 16, 2015 - Less Wrong Discussion
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Yes. Unless you think that all possible market information is reflected now, before it becomes available, someone makes money when information emerges, moving the market.
Yes, you can (theoretically) make money by front-running the market. But I don't think you can systematically lose money that way (and stay within EMH) and that's the question under discussion.
If someone is making money by front-running the market another person at the other side of the trade is losing money.
We're talking about ways to systematically lose money, which means you would need to systematically throw yourself into the front-runner's path, which means you would know where that path is, which means you can systematically forecast the front-running. I think the EMH would be a bit upset by that :-)
Simply making random trades in a market where some participants are front runners will mean that some of those trades are with front runners where you lose money.
I would call that systematically losing money. On the other hand it doesn't give you an ability to forcast where you will lose the money to make the opposite bet and win money.
Do you think our disagreement is about the way the EMH is defined or are you pointing to something more substantial?
No, no disagreement about EMH, that's exactly the point.