I’ve posted Podcast #145 to the “RobCasts” section of the site. It’s called The Candyland Hypothesis: Why Short-Term Timing Doesn’t Work.
Academics developed the Efficient Market Theory to explain why even super-smart investors could not pick winning stocks in the short term. The “hypothesis” that they came up with is that the market prices everything properly. It now appears that a far better explanation is that the market prices everything <i>improperly</i> in the short term. This explanation is every bit as good an explanation of the fact that super-smart investors cannot beat the market in the short term. And the historical data — which refutes the Efficient Market Theory — supports the new explanation.
Rob,
This is a classic. Outstanding.
Have fun.
John Walter Russell
Thank you for those kind words, John.
My advice to middle-class parents? Don’t ever dare to play Candyland with your pre-schoolers without first checking with a certified expert. There’s a lot more to this game than most people think. Eugene Fama proved it!
Rob
There’s a fellow named “Hello World” who has asked a number of questions at the thread related to the blog entry entitled “These People — Good People — Have Described Your Comments as Spammy and Obnoxious” This poster appears to be one of the Greaney Goons and he evidences a good bit of attitude in his comments. But some of the questions he poses are not entirely unreasonable, in my assessment. Depending on how much of the snarkiness that has become characteristic of the Passive Investing school in recent years you can endure, you might want to check out the discussion:
http://arichlife.passionsaving.com/2009/08/20/these-people-good-people-have-described-your-comments-as-spammy-obnoxious/comment-page-1/#comment-2728
Rob