Buy Bitcoin at Night
Overnight anomaly, anti-Instagram Instagram ads, insider venting, concentration limits, asymmetric bets and the Satoshi paradox.
A famous financial anomaly is that the stock market mostly goes up when it’s closed: “Over at least the past three decades, investors have earned 100% or more of the return on a wide range of risky assets when the markets are closed, and, as sure as day follows night, have earned zero or negative returns for bearing the risk of owning those assets during the daytime, when markets are open,” as Victor Haghani, Vladimir Ragulin and Richard Dewey have put it. That is, stocks tend broadly to open higher than they closed the previous day, and then to go down a bit during the trading day.
Nobody quite knows why. Bruce Knuteson has a famous theory, laid out in papers with titles like “Strikingly Suspicious Overnight and Intraday Returns,” “They Chose to Not Tell You,” “Nothing to See Here” and “They Still Haven’t Told You,” that quantitative trading firms conspire to inflate prices every morning and deflate them every evening. My own crude intuitive assumption is that, because US public companies try not to release information during market hours, most of the fundamental information that causes stocks to rise over the long run is in fact released and assimilated at night. But that is not very rigorous, and nobody else seems to believe it.