A Quote by Eugene Fama
The efficient market theory is one of the better models in the sense that it can be taken as true for every purpose I can think of. For investment purposes, there are very few investors that shouldn't behave as if markets are totally efficient.
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In certain circumstances, financial markets can affect the so-called fundamentals which they are supposed to reflect. When that happens, markets enter into a state of dynamic disequilibrium and behave quite differently from what would be considered normal by the theory of efficient markets. Such boom/bust sequences do not arise very often, but when they do, they can be very disruptive, exactly because they affect the fundamentals of the economy.
To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses - How to Value a Business, and How to Think About Market Prices.
Our purpose, as we face these challenges, remains clear - fair and orderly markets that allow for efficient capital formation, while protecting the interests of investors.
More and more investors may be coming into markets everywhere but that doesn't mean that the markets are really getting more and more efficient, even in the United States. It does mean that there is more access for savvy investors who watch the money flows.
The thing about markets, and I think the thing people don't understand about that, is markets are not kind, but they're very efficient. So when the marketplace determines an inefficiency in the system, it corrects that, and a market system that's left alone will reward good behavior and punish bad behavior.
Ben's Mr. Market allegory may seem out-of-date in today's investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging and betas. Their interest in such matters is understandable, since techniques shrouded in mystery clearly have value to the purveyor of investment advice. After all, what witch doctor has ever achieved fame and fortune by simply advising 'Take two aspirins'?
I want a Mini-Cooper because it's fuel efficient, emissions efficient and all that stuff. It's small and better for the environment. I think that will be my next car.
Observing that the market was FREQUENTLY efficient, EMT Adherents went on to conclude incorrectly that it was ALWAYS efficient. The difference between these propositions is night and day.
Successful investors tend to be unemotional, allowing the greed and fear of others to play into their hands. By having confidence in their own analysis and judgement, they respond to market forces not with blind emotion but with calculated reason. Successful investors, for example, demonstrate caution in frothy markets and steadfast conviction in panicky ones. Indeed, the very way an investor views the market and it’s price fluctuations is a key factor in his or her ultimate investment success or failure.
Poetry isn't an efficient tool for preserving experience, any more than it's an efficient mode of communication, but who says that it should be efficient?
If I subscribed to the efficient market theory I would still be delivering papers
The possibility that stock value in aggregate can become irrationally high is contrary to the hard-form "efficient market" theory that many of you once learned as gospel from your mistaken professors of yore. Your mistaken professors were too much influenced by "rational man" models of human behavior from economics and too little by "foolish man" models from psychology and real-world experience.
I am not well qualified to criticize the theory of rational expectations and the efficient market hypothesis because as a market participant I considered them so unrealistic that I never bothered to study them.
The photosynthesis we see with plants is not very efficient. Algaes are more efficient.
There is a lot of volatility in the digital asset market broadly, and certainly that is true in the bitcoin market. It's been true for XRP, and I think that's because these markets are very nascent.
Citadel is a global technology leader, recognized for its work to level the playing field for investors and make markets more fair, transparent and efficient. I look forward to leading this exemplary team as we grow this global business.
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