Tag: efficient markets
9 posts tagged "efficient markets".
The hypothesis that asset prices already reflect all available information, so it is extremely hard to beat the market consistently through stock-picking or market timing. Formalised by Eugene Fama in the 1960s, it is the intellectual backbone of passive investing: if markets are efficient, low-cost index funds will outperform most active managers over time. It is also the case against timing the market — jumping in and out to catch rallies and dodge crashes is a loser's game, because most gains arrive in a handful of unpredictable days that timers tend to miss, leaving compound interest and diversification to do the work instead. The blog treats efficient markets as a strong default rather than an iron law — a humility-inducing prior that exposes most "edges" as noise, luck, or hidden tail risk. The view sits in productive tension with behavioral economics, which catalogues the ways real markets and real investors fall short of the ideal.
Posts:
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Kindly Stop Saying The Efficient Market Hypothesis is Dead
There are whispers that the efficient-market hypothesis is dead, or dying, or at least has a very nasty cough. But rumours of its death have been greatly exaggerated.
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How to Profit From Coronavirus
A black swan event unleashes destruction, but also opportunity. What would it take to not only weather this situation, but profit from it?
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If the Stock Market Crashed Today
The standard line is that market crashes just don’t matter a damn if you're a long-term investor. Today, I'm no longer so sure that's true.
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How a Billionaire Taught Me to Invest Using the Force
I didn't get to ask David Booth to weigh in on the Han vs Greedo controversy, but our conversation was still among the most life-changing I’ve ever had.
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Inevitable Coronavirus Post
If it costs nothing at all to mitigate a small chance of a big risk, then do it! Ignore anyone who makes fun of you for being 'paranoid', and don't wait for permission.
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Beware of Geeks Bearing Formulas
The history of finance is a history of brains splattered on the pavement. Just how safe is the buy-and-hold index funds orthodoxy?
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Meditations on Momentum
First, work your butt off to get some momentum behind you. Keep a watchful eye out for entropy. Then, focus your efforts on helping other people up.
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The Worst Investment Ever: How I Lost $10,000 Catching a Falling Knife
I stretched out my bandaged hand, and this time the knife took a finger off. I'm a slow learner when it comes to picking stocks, but you don't have to be.
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How to Become an Investor: An Animated Guide for Beginners
Getting started with investing is easy, and anyone can do it! Come join our hero Jimmy on his epic journey from total noob to investing mogul.
