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> Well, the efficient markets hypothesis is true, just as much as Newton's law of universal gravity is true. That's a terrible analogy. Gravity works exactly t
by notacoward 8y ago
> Well, the efficient markets hypothesis is true, just as much as Newton's law of universal gravity is true.
That's a terrible analogy. Gravity works exactly the same way except in some extremely exotic conditions that none of us will ever experience. The "pockets of inefficiency" in watered-down EMH are so pervasive that we should really be talking about "pockets of efficiency" instead. The physics analogy to EMH would be something like magnetism - a phenomenon that is undoubtedly real and useful, but not really all that common.
- Nasrudith 8y agoYeah it isn't wrong but I would compare it to frictionless plain physics - it can point in the right direction but it is missing other things and some applications which stray from it and its assumptions can wind up vastly different if you try to take it as gospel but at the same time there are fundamental "can't do thats" predicted. You can't get rich through printing money because that devalues holdings in exchange for more fine grained divisions - fine to have some with economic growth creating corresponding goods.