The aphorism "all models are wrong, some are useful" has been mentioned twice recently without naming the author and neither will I. However, this is a hint: he also wrote the song "There is no theorem like Bayes' theorem."
On Thu, Jul 25, 2019 at 1:04 PM Devon McCormick <devon...@gmail.com> wrote: > EMH is a model and all models are wrong but some of them are useful. I > seriously doubt EMH is being taught as gospel anywhere but if it were so > obviously wrong, we would see lots of people beating the market and we > don't. As a first-order approximation, it certainly looks true (the weak > form). > > On Thu, Jul 25, 2019 at 12:48 PM Raul Miller <rauldmil...@gmail.com> > wrote: > > > https://arxiv.org/pdf/1002.2284.pdf > > > > On Thu, Jul 25, 2019 at 12:30 PM Devon McCormick <devon...@gmail.com> > > wrote: > > > I think Dan Bron sent this paper to the forum a few years ago. The > > author > > > errs in fixating on the "past prices can predict future prices" part of > > > refuting EMH but this is patently false: the Japanese stock market did > > not > > > tank in the wake of the Fukushima disaster because of its price > history. > > > It was affected by external, non-price information. > > > > That's not the issue. > > > > The issue is *not* that "markets can't get thing anything right". > > > > The issue is that "markets can't get everything right". > > > > Stated this way, it should be obvious, of course. But many > > universities were still teaching the efficient market hypothesis (and > > grading papers so that you had to agree with it to get good grades in > > economics). > > > > -- > > Raul > > ---------------------------------------------------------------------- > > For information about J forums see http://www.jsoftware.com/forums.htm > > > > > -- > > Devon McCormick, CFA > > Quantitative Consultant > ---------------------------------------------------------------------- > For information about J forums see http://www.jsoftware.com/forums.htm > ---------------------------------------------------------------------- For information about J forums see http://www.jsoftware.com/forums.htm
