The News Radar

Timely links to external news and articles, usually valuation related, with occasional commentary.


Originally posted Monday, 6 June 2022
The Inefficient Market Hypothesis

The Efficient Market Hypothesis is a hypothesis in financial economics that states that asset prices reflect all available information.

A direct implication of the EMH is that it is impossible to "beat the market" consistently on a risk-adjusted basis since market prices should only react to new information. Developed independently by Samuelson and Fama in the 1960s, the EMH has become a holy grail for investors and academics alike.

I personally think there's more to this market thing than the net present value of future cash flows, and markets certainly don't seem to efficiently digest new information.

Today I am publishing my rebuttal. Ladies and gentlemen, I give you the Inefficient Market Hypothesis: 25 Instances That Prove Samuelson and Fama Wrong.

CAPM, meet CAP MEME

I did my undergrad thesis on why the Efficient Market Hypothesis was wrong, but it wasn't nearly as funny as this.