One thing that worries me about this sort of alpha is that the "one in ten years" opportunities are also going to come with a lot of political backlash, in particular, charges of "price gouging" (or "war profiteering", if it's due to war). I think there's a real risk you wait for ten years only to see the rug pulled once opportunity fina…
One thing that worries me about this sort of alpha is that the "one in ten years" opportunities are also going to come with a lot of political backlash, in particular, charges of "price gouging" (or "war profiteering", if it's due to war). I think there's a real risk you wait for ten years only to see the rug pulled once opportunity finally does come.
And I'm not even sure that these charges are wrong. The "cure for high prices is high prices" only seems true if we can *quickly* produce more supply, which is often not the case in an emergency. I think you could make an argument that a more efficient market would have higher prices during the regular nine years so that these sorts of price spikes don't happen or aren't as large.
One thing that worries me about this sort of alpha is that the "one in ten years" opportunities are also going to come with a lot of political backlash, in particular, charges of "price gouging" (or "war profiteering", if it's due to war). I think there's a real risk you wait for ten years only to see the rug pulled once opportunity finally does come.
And I'm not even sure that these charges are wrong. The "cure for high prices is high prices" only seems true if we can *quickly* produce more supply, which is often not the case in an emergency. I think you could make an argument that a more efficient market would have higher prices during the regular nine years so that these sorts of price spikes don't happen or aren't as large.