I’ve posted Entry #107 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller Shows Too Much Respect for the Efficient Market Hypothesis.
Juicy Excerpt: The Efficient Market Hypothesis is a silly idea. The idea that the market sets prices properly has caused more human misery than any other idea ever advanced in the history of personal finance. As Shiller’s words above note, the theory has been statistically rejected many times. A theory that has been statistically rejected many times is NOT a serious theory. It is a foolish, dangerous, wrong-headed theory. Why does Shiller conclude otherwise? He says that the word done in support of the Efficient Market Hypothesis is “of the highest quality.” What does that mean? My sense is that Shiller and I have very different ideas of what the phrase “of the highest quality” signifies.