Talk:Efficient markets theory
The whole efficient market hypothesis is a classic example of the fallacy of begging the question. Specifically, if those who proffer the hypothesis are asked to demonstrate how the perfect information flow is accomplished in the real world, then they fail. Basically, the EMH is the socialist calculation hypothesis in another guise, which has been refuted.
The conclusions drawn are exactly those drawn by those with standard statistical training, which also makes far-fetched leaps postulating infinite universes and building vast edifices of mathematics upon them.
There is no such thing as an "efficient market" in reality. None can be demonstrated.
Yes, "efficient markets" are like "frictionless surfaces" - they are idealized constructs that never occur in nature. But markets can be characterized by varying degrees of efficiency. Bond markets are highly efficient. Equity markets are slighty less efficient. And illiquid markets, such as venture capital are even less efficient because of the lack of free information flow.
So, while a perfectly efficient market may never exist, the construct is a useful one because it helps distinguish between being able to consistently outperform a market's movements and simply being statistically "lucky".
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