The theory works except when it does not.Reader comment on: The Efficient Markets Hypothesis Comeback Submitted by Lyle (United States), Apr 14, 2010 18:32 The theory assumes emotionless traders essentially calculating machines. A lot of the time the aggregate does work that way but then you have manias and panics where the people go into herd following mode ignoring the economic realities (see housing bubble). If markets were run only by computers perhaps the theory would hold more, but they are full of humans. Recall that the talking heads talk about animal spirits, which are not cool and calculating. These spirits exist on both the way up and the way down. Note: Comments are moderated by the editor and are subject to editing. Other reader comments on this item
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