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Posts Tagged ‘Efficient Market Hypothesis’
Efficient Market Hypothesis: R.I.P.
Of all the belief systems of Wall Street, few can claim the devoted following of the Efficient Market Hypothesis, the idea that stock prices adhere to the same laws of supply-and-demand that govern retail products. Once coined the theoretical “Parthenon” of economics, this notion has consistently endured the test of time —– until now. Academics and advisors across the globe are currently exposing crack after crack in the “Efficient” model so deep as to bring the entire theory crashing to the ground.
“The EMH is not only dead,” writes a July 29, 2010 news source. “It’s really, most sincerely dead.” (Minyanville)
As to what caused the theory’s collapse — one recent business journal offers this insight: Read the rest of this entry »
What Does NOT Move Markets? Examining 8 Claims of Market Efficiency
Economists love to talk about exogenous shocks -- events outside of the financial system that cause markets to move. But what if it's just talk and not real at all? Read the rest of this entry »