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efficient market hypothesis In finance, the efficient-market hypothesis (EMH) asserts that financial markets are “informationally efficient”, or that prices on traded assets (e.g., stocks, bonds, or property) already reflect all known information, and instantly change to reflect new information. Therefore, according to theory, it is impossible to consistently outperform the market by using any information that the market already knows, except through luck. Information or news in the EMH is defined as anything that may affect prices that is unknowable in the present and thus appears randomly in the future. The hypothesis has been attacked lately by critics who blame belief in rational markets for much of the current financial crisis, with noted financial journalist Roger Lowenstein recently declaring “The upside of the current Great Recession is that it could drive a stake through the heart of the academic nostrum known as the efficient-market hypothesis.” (Wikipedia Jan 2010)
Auction Market Preferred Shares
By John Schroy, on March 30th, 2009 | 
Failures of commercial rating services to do an adequate job have been widely recognized, in the wake of the Crash of 2008. Much of the criticism, however, has been directed to the conflicts of interests that are a characteristic of these services.
This article discusses other weaknesses of commercial publishers of investment information, such as the industrial nature of their operations and their marketing focus on traders rather than long-term investors. The case of Auction Market Preferred Shares, which failed in 2008, is covered in detail.
The Efficient Market Hypothesis
By John Schroy, on March 23rd, 2009 | 
The Crash of 2008 was exacerbated by a FASB mark-to-market rule that required financial institutions to write down assets below commonsense valuation. As John Maynard Keynes remarked, the problem was an academic scribbler’s unproven theory, some forty years ago.
That ’scribbler’ was Eugene Fama and his unproven idea was called “The Efficient Market Hypothesis”. The Crash of 2008 did much to discredit this harmful musing that supported Modern Portfolio Theory, mark-to-mark accounting, and unmanaged index funds.
Don't worry, be happy
By John Schroy, on August 2nd, 2006 | 
In July 2006, the Government Accounting Office issued a report saying that the retirement of the Baby Boomers should not have a negative effect on stock prices.
This article reviews the GAO reasoning and concludes that the government’s ‘Don’t worry, be happy’ conclusion is not credible.
The Woodstock kids will soon have to think about assisted living costs.
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