https://www.pairagraph.com/dialogue/c93c449006c344ce94e6e2e8fbe7aba3/
Robert Shiller vs. Burton Malkiel
Shiller:
"The efficient markets theory, and the random walk theory, are half-truths. Burt says almost the same thing in his 12th edition, which now includes a chapter on behavioral finance. He paraphrases Mark Twain: “I conclude that reports of the death of efficient markets hypothesis are vastly exaggerated.” Not wrong, just exaggerated.
How do Burt and I differ? I am not sure. I am apparently more likely to advise people to take a look at their portfolio right now, and to consider lightening up a little on risky or stick-in-the-mud holdings, if they haven’t already. The coronavirus pandemic remains a time of fundamental change, it is far from over, and let’s not forget that."
Malkiel:
"It is probably useful to think of the stock market in terms of “relative” rather than absolute efficiency. Andrew Lo suggests that few engineers would contemplate testing whether a given engine is perfectly efficient. But they would attempt to measure the efficiency of that engine relative to a frictionless ideal. Similarly, it is unrealistic to require our financial markets to be perfectly efficient in order to accept EMH. Perhaps the difference between Bob and me is one of degree. I believe that our markets come very close to the EMH ideal. Bob is more skeptical. In any event, I hope his stocks are invested in low-cost index funds."
Submitted August 15, 2020 at 08:19PM by lawschool33 https://ift.tt/3kO0xnc
