ask Dcifrths...well, anything...about finance/mkts/ports that is.

[HP]

Okay I had a highly theoretical, probably not practical at all, thought the other day. Feel free to ignore if it's pointless to discuss

Assume:

a perfectly efficient money market
it is possible to borrow and lend cash at the same interest rate, in the US and in Europe
there will always be a minimum amount variance in the USD/EUR
the USD and EUR will always exist

Okay so basically we buy 100 USD worth of EUR today, and put the EUR in the bank earning interest.

We buy back USD once the exchange rate is such that we make ten times as much USD than we would have if we had just put it into a US bank account to begin with

Now, if I've understood random walk theory correctly, if there will always be a minimum amount of variance, and it's always a random walk, the chance the exchange rate will eventually hit our target (so we can make ten times as much) is 100%. It may take a number generations and our decedents may be the only ones profiting, but we don't mind we are nice people

This seems counterintuitive - it's like we are beating the perfectly efficient market. Thoughts?