Binyamin Appelbaum: "As the old saying goes, there are no efficient market hypothesists in foxholes. They gave a guy a Nobel Prize for writing that financial markets are efficient. I'll never find that not funny." Noah Smith: "EMH is the best investing advice you or most people will ever receive."... Brad DeLong: EMH is a reasonable theory of short run returns. It is a lousy theory of values. And it is an even lousy her theory of price movements. Fans and co’s inability to distinguish between those three at all was what convinced me they were morons...
...Also Merton, Scholes, and Fama’s pretending that there was an EMH explanation for Black Monday in 1987. Also their trying to do macro.
Noah Smith: No disagreement from me!
Brad DeLong: Perhaps this is best explained by resorting to Isaiah Berlin’s metaphor of hedgehogs and foxes:
- Foxes are useful and valuable to listen to because they know a lot about a complicated world.
- Hedgehogs know one thing, and have negative knowledge of the rest of the world.
Hedgehogs are poisonous morons who corrupt your mind. Hedgehogs can be useful in the information ecology—if and only if the one thing they happen to know is underweighted In the intellectual portfolio.
But that they can be useful does not make them smart.
And it definitely does not make them wise
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