Not all that surprising. A couple years ago a company called Long Island Ice Tea Corp. changed their name to Long Island Blockchain and their stock shot up 289%.
I remember reading about a company's shares rising by like 400% after it added "blockchain" to its name. Rational agents are going to do rational things all over the world /s.
What if you think everyone else is rational, but they'll all buy the stock for the same reason as you? It's an entirely rational system that leads to a completely irrational outcome.
tl;dr price for the "CUBA fund" spikes following Obama announcement of normalizing relations, despite the CUBA fund having nothing at all to do with CUBA.
If you see EMH as a general principle: all present information is incorporated in the price and all Sharpe ratios trend to the market Sharpe ratio, it makes more sense.
No one actually believes in strong EMH, that is, it’s impossible to beat the market Sharpe ratio.
Not going to sign up to read that article, so apologies if this is off base or duplicative of what's in the article.
But, automated sentiment analysis gone wrong maybe? Bots see a bunch of negative things with "cuba" in it on twitter/the news and decide that cuba the fund is in trouble.
The fund went up not down. That aside, I believe the point is that if a bot goes and does that, it is simply doing what a human told it to do; bots reflect the commands of their human masters in an environment (financial markets) created by and for human endeavors. Hiding behind "bots" is not a way to get insight into mechanics of how markets (mal)function, IMO.
Well sure, but (under my thoery) the humans rationally decided to use automated sentiment analysis, knowing that there is a error rate, but finding that it is low enough that they can make money. This just happened to be one of those errors. And substitute negative sentiment for positive sentiment in my original post to match the direction of stock movement.
