Ask HN: Is the market efficient or not?

by Ardit20 on 7/29/2009, 6:33 PM with 4 comments

I suppose this is the defining question of our century. What do you guys think?

  • by rwolf on 7/29/2009, 8:04 PM

    The EMH doesn't take in to account arbitrage risk (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1292533) among other things.

    Bonus questions: Is it so inefficient that models based on EMH should be replaced? Is there a better assumption we can base finance on?

  • by tokenadult on 7/29/2009, 6:56 PM

    The old saying attributed to John Maynard Keynes is that the market can remain irrational longer than you can remain solvent.

  • by yan on 7/29/2009, 6:35 PM

    I don't believe it is in the short term efficient nor that its self-correcting, in the short term. In my opinion, the only way to reliably make money is to have insider information. People day-trading with no non-public information are trying to extract patterns from noise.

  • by thunk on 7/29/2009, 7:48 PM

    A market's efficiency is inversely proportional to its complexity -- proportional, that is, to the average understanding of its participants.

  • by on 7/29/2009, 10:47 PM

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