I’ve posted an article to the The Book I Read section of the site titled The Myth of the Rational Market — A Fine Book Missing a Fine Conclusion.
Juicy Excerpt: The Myth of the Rational Market, by Juston Fox, is an important book. It does a fine job of explaining the analytical mistakes made by efficient market proponents that caused the economic crisis. However, it fails to describe how we need to change the investing advice promoted to middle-class investors to escape this crisis (this article was posted in December 2011) and to avoid future ones.
Fox begs off, saying “This book offers no grand new theory of how markets truly behave.” I wish it did. The book does a great job of telling the story of how we came to find ourselves in the giant mess we find ourselves in today. But we need help in figuring out what to do to get out of the mess. I wish that Fox had devoted his mental energies to helping us discover where we need to go from here (I of course believe that the answer is to work together to bury Buy-and-Hold 30 feet in the ground, where it can do no further harm to humans and other living things, and to replace it with Valuation-Informed Indexing.