[manodocedoceu]

Im not a believer in the efficient market hypothesis. Remember, it's a hypothesis.

Also, The grand central station analogy is just that, an analogy.

Both of these dangerously oversimplify the phenomenon they try to describe. Modern Markets are unfathomably complex systems.

The Efficient market hypothesis is useful as a tool in reaching approximate, generalized, comprehension (ie: for lays and as a peripheral complement for practictioners), but not at all useful in application (some wonderful historical examples out there, study up!).

The fact is that price and markets are not mechanistic. Price has some seemingly objective measures, but those are actually based on projections of future value.

Price is based on collectively determined projections/belief of future value, sure, but this talk of markets becoming more efficient is moot, as we are seeing that, while reacting faster and in more iterations due to transaction efficiency, those don't help us find a 'better' indexable measure of the future value. Furthermore, transactuon costs have lowered, but it's arguable that the diversity of perspectives governing price have been reduced quite drastically.

1) unquestioning belief in efficient market hypothesis is a classic 'confuse the word-concept rose with the actual rose' fallacy. It doesn't work in making actual decisions.

2) price is a subjective gauge of expected future value. As we arent in the future it's impossible to have a more efficient price, since there is no objectivity with which to match.

3) price finding efficiency ≠ transaction efficiency

4) transaction efficiency has improved concurrently with the hyperstandardization of perspective, method and hypercentralization of participation, which has made price-finding of 'financial markets' much less effective as a universal gauge with any bearing on physical markets composed of commercial transactions with merit to anyone other than speculators in abstract 'markets.'

5. Considering all of the above, your argument that improved transaction efficiency is the same as improved price efficiency, and that faster and cheaper transactions will reduce brain-drain seems about as silly as the 'we don't need to worry about babyloniancivilization-induced mass-extinction because singularity.'

[eru]

The term 'efficient market hypothesis' is a bit of a misnomer in the singular. It's actually a bunch of hypothesis that eg differ in strength. The strongest form, that markets knows everything, is probably wrong. The weakest form, that it's hard work to beat those traders at hedge funds and Goldman Sachs with information you got out of the evening news, is almost certainly true. Exactly which strength in the middle applies in the real world is an empirical question and depends eg on the markets under observation.

In any case, https://www.chrisstucchio.com/blog/2012/hft_whats_broken.htm... makes for some interesting arguments.