oxy, Traders as species exist today just based on the premise that Markets are inefficient and they want to monetize the inefficiencies, doubting market in efficiency is doubting their own existence, if markets were efficient, everyone will invest in an index and find a job. do you think anyone will take the bait for the first ?
If each and every trader had spotted that inefficiency, there would be none going bust. Most traders trade who boast to have spotted some inefficiency would fall under the dreaded "
clustering illusion".
Are markets purely efficient or purely inefficient or partly inefficient? If some inefficiency is spotted on training data, would such an inefficiency hold good for future data set as well? Would it continue for an indefinite period of time? If not, when does it cease to exist? If it ceases to exist what effect will it have on my investment returns? If the markets are partly inefficient, when does inefficiency exists and when does it not?
These are questions to be answered if we are to go by a single premise hypothesis (i.e, market is efficient or the market is inefficient). Market "determined" strategy adoption eliminates these assumptions, since we are assured of ~ at least the benchmark returns and at the same time, can trade the inefficiency to ~ its fullest extent. In short, we are just doing away with assumptions necessary otherwise.