So what they won a nobel prize and predicted other bubbles. I think Shiller & Fama are just upset they didnt get invited to the never ending party filled with easy money and easy women. I mean, realistically speaking there is no reason the sp500 shouldnt be soaring over 1.7k by now, right?
Is this like the “hindsight award”? Also, how come all the Nobel prizes now are split among three people? Surely, of these three guys, one of them is better than the other two.
Interesting to see how this research has evolved over time though. Professor Fama originally argued that markets are efficient and unpredictable. Yet, this Nobel prize is largely for his findings on asset bubbles. If economists can spot asset bubbles, then clearly, there is some value in active management by astute investors.
Haven’t those guys been completely wrong about everything since forever? I don’t know why anyone still listens to them. The market is not efficient. You can’t have companies that are obviously, objectively committing fraud where their business is worth zero but is selling for hundreds of millions of market cap, and say that’s efficient. You can’t have world class businesses selling for 0.2x TBV with no solvency risk and no major issues and say that’s efficient (happened on the KOSE). You can’t have earnings surprises in some predictable, recurring ways and say that is efficient.
The efficiency claim gets thinner with every year. The market is 100% efficient. Except for small companies. And low TBV and P/E companies. And companies that are under followed by the sell side. But don’t worry, it’s totally efficient other than the thousands of stocks those statements apply to. NO! It’s efficient! Please? Anyone? Bueller?
They should stop publishing, it’s getting embarrassing.
Great reference! Top notch movie.
Do me a favor, open R and get any random 100 stocks and test for random walk. (just run ACF/PACF for simplicity)
Report results back.
Then lets talk about inefficient markets
I like the random articles that pop up every several months where researchers randomly have a cat, monkey, or a stripper choose random stocks and ends up out-performing the fund manager universe.
Strippers are a wealth of info and are privy to a lot of insider info. Just saying,
^ Couldn’t agree more. I imagine I-bankers and printers throw out all kinds of insider info in an attempt to impress strippers.
Used to be the village barber back in the day
I might have posted this on here before, so forgive me if I’m repeating myself.
When I was a lowly grad school intern, my fellow interns and I took a tour of the NYSE, including the compliance department. One of the folks there told us about how they had busted an insider trading “ring”. They somehow identified unusual trading activity in companies shortly before major announcements by investors in the same neighborhood in NYC. After months of investigating, they were able to figure out that an I-banker who lived in the neighborhood frequented a bar in the neighborhood and would start throwing out all kinds of insider info after he got a few drinks in him in an attempt to show everyone what a big shot he was. Other regulars eventually figured out that the guy was not full of dung and started trading on the information. Not sure if it’s true or not, but thought it was a pretty cool story.
Cliff Asness to Fama - “If you’re so smart, why am I rich?”
Some strip club in San Francisco had a special event which coincided with a JPM conference. Strip clubs and finance workers have a long standing relationship.