Imagine that a friend of yours - trained in machine learning and econometrics - informs you that based on her analysis of past data she has discovered a rule that can be used to predict the future value of Tesla stock. The rule can be captured with a complicated equation of the form P1+1 = f (Pt, Pt-1, ..., P-T). We can be sure that such a rule can be used to earn excess returns will not be useful will be applicable and will allow many investors to reduce their exposure to risk can help in securing higher returns, but its usage will be associated with a higher exposure to risk