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Message
re: MB’s thoughts on the Efficient-market hypothesis
Posted on 11/30/20 at 7:48 pm to TigerGrad2011
Posted on 11/30/20 at 7:48 pm to TigerGrad2011
Interesting that the first 3 replies state that they don’t believe in the efficient market hypothesis. Interesting because so many people on the board are Vanguard S&P 500 index fund pumpers. (Me included).
But yes, I believe that all public information is reflected in equity prices. That’s why the market adjusts all day while open, investors are trying to value the companies future returns and earnings to relevant news, data, and economic trends.
I think that certain subsets of people can do better with some investment selection because their knowledge of an industry paired with their comfort with the risks within the industry. But broad market arbitrage...I don’t think so.
But yes, I believe that all public information is reflected in equity prices. That’s why the market adjusts all day while open, investors are trying to value the companies future returns and earnings to relevant news, data, and economic trends.
I think that certain subsets of people can do better with some investment selection because their knowledge of an industry paired with their comfort with the risks within the industry. But broad market arbitrage...I don’t think so.
2
Posted on 11/30/20 at 8:08 pm to AugustaTiger
quote:
Interesting because so many people on the board are Vanguard S&P 500 index fund pumpers.
Oddly enough, the rise of passive is one of the things that has discredited EMH. As I said, EMH assumes markets are frictionless, but passive investments do cause friction, i.e. they result in stocks being indiscriminately bought at the ask which itself can cause markets to become dislocated from fair value, which EMH says isn’t supposed to happen.
ETA: go to this link and search for “the biggest change that happened” and read that segment from Mike Green
LINK
Or read this book:
This post was edited on 11/30/20 at 8:16 pm
Posted on 11/30/20 at 8:55 pm to AugustaTiger
quote:
Interesting because so many people on the board are Vanguard S&P 500 index fund pumpers.
Have you seen the top 4 holdings thread? This board ain’t your dad’s bogleheads forum.
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