The Efficient Market Hypothesis is a hypothesis in financial economics that states that asset prices reflect all available information
Today I am publishing my rebuttal. Ladies and gentlemen, I give you the Inefficient Market Hypothesis: 25 Instances That Prove Samuelson and Fama Wrong.
CAPM, meet CAP MEME.
Which of the 25 instances is the one you found most interesting / amusing / shocking?
Mine is:
Benjamin Graham, the father of value investing, realized greater profits from his one investment in GEICO than from the rest of his portfolio combined.
I wonder if Apple will prove to be Buffett’s greatest?
20) After perusing Reddit chatrooms and discord channels for a few months, I made 7x my annual salary in nine months by hitting the right buttons on my phone, then I blew 3x my annual salary in nine minutes by hitting the wrong buttons on my phone.
I choose it over and over. 7 steps forward, 3 steps back.
ralph
The Efficient Market Hypothesis is a hypothesis in financial economics that states that asset prices reflect all available information…
It’s good to be careful to avoid attacking a straw man variant by accident.
(not saying you were, or he was).
There is quite a gap between weak form EMH and strong form EMH. Pretty close to nobody believes the latter.
But I do like Mr Buffett’s succinct disproof:
“I’d be a bum on the street with a tin cup if the markets were always efficient.”
Pretty convincing.
But what if both of them are random numbers with an unknown distribution?
I like to PRETEND that by reading these boards and some FA and TA on a stock, my choices are SWAGs rather than WAGs.
So far, the scale seems to be slightly tipped in my favor.
“I’d be a bum on the street with a tin cup if the markets were always efficient.”
Well, not quite a bum on the street. The S&P 500 has returned 8.8% annualized over the last 25 years. Not too shabby. True, Berkshire’s equity portfolio has done better, 11.2%, partly through buying low and partly though buying good companies. Idealist me, I think that the world would be better off if all assets were always priced at fair value. No lurching from speculative boom to bust. Value investors could still outperform the broad market by buying superior companies.
The S&P 500 has returned 8.8% annualized over the last 25 years. Not too shabby. True, Berkshire’s equity portfolio has done better, 11.2%
Just saying, you have to be a genius like Warren to beat the index by 2.5%, speaks volume about why most folks would be better off investing in Index and enjoy their life.
