# The Efficient LessWrong Hypothesis - Stock Investing Competition

There has been debate to whether the [Efficient Market Hypothesis](https://www.lesswrong.com/tag/efficient-market-hypothesis#:~:text=The%20Efficient%20Market%20Hypothesis%20states,information%20other%20traders%20don't.) is or ever was valid.

The evidence brought forward of its death is usually stories of people in the LessWrong community correctly predicting market changes, using only widely available information and rational reasoning.

It might be correct that the market is highly efficient, but that LessWrong members and the community as a whole, in many cases, is even more efficient. 

It is not unreasonable, that rationalists with a certain area of expertise and great knowledge of biases and reasoning, might occasionally find investment opportunities they can reasonably expect to beat the market (adjusted for risk of course). Even if for any given member this happens only once or twice in a lifetime, those opportunities could be highly valuable for the community. And if a great number of LessWrong members shared when believing to have found such opportunities, it might be possible to consistently beat the market. At least until a big investment fund picks up on it and starts analysing LessWrong for stock predictions.

To test the “Efficient LessWrong Hypothesis”, I’m arranging two competitions:

1.  Stock Picking Competition - Participants comment what security (stock, bond, crypto, etc) they believe will outperform the market in general (VTSAX) [adjusted for risk](https://www.investopedia.com/terms/r/riskadjustedreturn.asp#:~:text=It%20is%20calculated%20by%20taking,by%20the%20investment's%20standard%20deviation.). The most upvoted suggestions win. (Outlined below)  
     
2.  Stock Price Prediction Competition - Participants get to submit probability distributions for how they believe the stocks from the previous competition will perform. (This competition will begin after the first is completed)

**Stock Picking Competition - Rules**

All LessWrong members are invited to comment on this post, what securities they believe will outperform the market over the next twelve months, along with their reasoning for why they think the stock will outperform VTSAX [adjusted for risk](https://www.investopedia.com/terms/r/riskadjustedreturn.asp#:~:text=It%20is%20calculated%20by%20taking,by%20the%20investment's%20standard%20deviation.). 

Any security, such as stocks, bonds or cryptocurrencies,  traded on any major trading platform, such as eToro and RobinHood can be picked. Also, a very small group of stocks could be picked together to decrease risk, for example “I suggest AMD and Nvidia stocks, because GPU market will do well, and buying both decreases risk.”

No investment strategy except for the “buy and hold” can be considered in this competition.

Please upvote other comments, based on how convincing those investment opportunities seem to you.

**Reward**

The top four most upvoted comments containing investment recommendations, with at least five karma, will be considered winners. Each author will be rewarded 50 USD that can either be transferred through PayPal or Revolut, or donated to a charity of the authors choice.

Also, there is a reward for 30 USD each, for the top two upvoted comments that do not contain stock recommendations, assuming they all have at least ten karma. For example these comments can be critique or feedback on other investment suggestions, questions about the competitions or suggestions to improve the competition.

**Deadline**

Sunday the 17th of April, at 23:59 CET (Central European Time), the stock picking competition ends and winners will be contacted.

**Edits**

Shorting is allowed, and profits from it will be calculated at the spread of the shorted stock, and VTSAX + the return of VTSAX. Meaning if stock A goes down 10% and VTSAX increases 5%, the investment made 10% + 5% + 5% = 20%.

Minimum numbers required for a winner in the top four changed from ten to five karma.

**Winner announcement!**

The competition has now been finalized.

No comment with a security suggestion reached five karma, but to encourage participation in future contests, I'm lowering the limit to three karma. That means that [**jimv**](https://www.lesswrong.com/users/jimv)**,** [**Zach Stein-Perlman**](https://www.lesswrong.com/users/zach-stein-perlman) and [**cat from /dev/null**](https://www.lesswrong.com/users/cat-from-dev-null)  are winners!

Also, [**lechmazur**](https://www.lesswrong.com/users/lechmazur)  also wins 30 usd for his comment with 11 upvotes. 

Winners will be contacted shortly.

Soon part two of the competition will start. Participants will be able to probability distributions on the securities from this contests. Rewards will be given to participants in relation to how much their prediction outperforms the market.