What would that look like? Ex post the returns of different stocks are very different. Ex ante, if you think some stock is going to have low returns, sell it short.
A tardy reply. But I presume there could be some evidence? If you try to think of any, can you? If not how could anyone have much confidence in this whatsoever?
I don’t quite understand what you are asking for here / what you are potentially disagreeing with. What kind of evidence do you expect?
The average stock has the same returns as the index, that’s the definition of the index (for some notion of average and some universe of stocks). If you are a good enough predictor, then from your perspective some stocks might have predictably low returns. And in that case you can trivially beat the market.
There is a huge amount of evidence that when there is bad news about an asset’s expected future returns, the price of that asset generally drops, raising the expected future returns. But I assume that’s not what you are wondering about.
How come?
If the returns were worse, the price would drop.
Interesting—is there empirical evidence that this in fact happens?
What would that look like? Ex post the returns of different stocks are very different. Ex ante, if you think some stock is going to have low returns, sell it short.
A tardy reply. But I presume there could be some evidence? If you try to think of any, can you? If not how could anyone have much confidence in this whatsoever?
I don’t quite understand what you are asking for here / what you are potentially disagreeing with. What kind of evidence do you expect?
The average stock has the same returns as the index, that’s the definition of the index (for some notion of average and some universe of stocks). If you are a good enough predictor, then from your perspective some stocks might have predictably low returns. And in that case you can trivially beat the market.
There is a huge amount of evidence that when there is bad news about an asset’s expected future returns, the price of that asset generally drops, raising the expected future returns. But I assume that’s not what you are wondering about.