I’ve posted Entry #61 to my weekly Investing: The New Rules column at the Death by 1,000 Papercuts site. It’s called There’s No Free Market Without Free Speech.
Juicy Excerpt: Fama was both right and wrong. He was right in theory. He assumed a world in which investors act in their self interests and he is right that in that world it would not be possible to beat the market.
In practical terms, Fama was wrong. He failed to take into consideration the hundreds of millions of dollars that The Stock-Selling Industry can devote to keeping from investors the information they need to learn how to invest effectively. So long as most investors remain unaware of the realities, the market remains inefficient. It is possible today for those who have examined the research on their own to beat the market because they possess a big edge over those operating under the mistaken presumption that The Stock-Selling Industry is telling them the straight story.
What we have today is not a free market but Crony Capitalism. My worry is that, when Crony Capitalism causes a deepening of the economic crisis, it will be the free market that was supplanted by the Crony Capitalists that will be blamed.