In my very humble opinion, what I just read was a lengthy and macchiavellan explanation of a simple concept: if your co-workers are happy with their job and you don't, and you all get paid the same, you might want to consider looking for another job that better fill your expectations.
There's no need for EMH theories and graphs to get that.
He should take this a step further and talk about BATNA. It explains a lot of other reasons why you might stay in a crappy job, such as that the job market is lousy right now. You can also say the job market is not "liquid" right now.
Many people are sitting in local maxima rather than risking their milk money trying to climb the ladder. The sculptor works at a bank and the banker works at an antique store because it's not time to follow your dreams just yet...
"If all you are getting from work is a paycheck, you are underpaid." -Jim Rohn
Someone once explained to me that capitalism is based on overpaying you for the first few years of your career and underpaying you for the next forty years.
Efficient market hypothesis (EMH) is a powerful idea. It started as a way to explain how prices of tradeable securities will reflect their real value.
Objectively, the efficient market hypothesis was handed it's head in the last crash. The only "power" in the hypothesis is the "powerful" ability it gives stock brokers to talk people into putting their 401Ks into some big gambles.
If it doesn't work for a relatively straight-forward market like securities, it seems doubtful it would for the very opaque and complex labor market.
Objectively, the efficient market hypothesis was handed it's head in the last crash.
Interesting. Could you please explain the trading strategy based on market crashes like the last one which you believe is a counterexample to EMH (assuming you are not still getting rich with it)?
I know, I work for one of them. I certainly would not claim markets are 100% efficient.
It's joe_the_user's argument that I'm disputing, not his conclusion. In general, when you make an argument that the EMH is false and certain securities are priced incorrectly (I'm guessing he is referring to houses or MBS), you should have a track record of getting rich based on trading those securities.
Does that mean everyone who does not have such a track record should believe in EMH? Or should they just not make arguments that do anything to contradict it? Or something else?
In any specific case, you should believe in the EMH. It's the safest assumption.
And yes, once you are convinced that markets are inefficient, you should not make any public arguments contradicting the EMH. You should STFU until after you have earned so much money that you don't care about earning any more [1].
[1] Obviously you can talk to potential investors/employees/etc, keeping in mind that any one of them might steal your strategy.
> Some investors clearly have made returns over the last fifty years at substantially above the market rate.
That doesn't disprove the EMH as seemingly consistent winners and losers are consequences of any random system.
Note that the EMH just says that the market price reflects all public information. It doesn't say that the market price is the correct value wrt every individual.
For example, I may be spending down, perhaps because I have a terminal disease while you're saving for a new car. Those situations mean that the "value" that I'll get from certain purchases is very different from the value that you get for the exact same purchases.
Uh, and a huge number of people knew housing was over-valued. If you don't know the turning point in a market, knowing the market isn't efficient doesn't tell your next move - if the markets keep being inefficient, you don't make anything. Taleb made money but far more people made far more money - by finding the bigger sucker.
Edit: Also, the particular mechanisms of the last crisis, where synthetic bonds exploded via their unrealistic assumptions and "fair value accounting" had to be suspended, were a rather specific shot against the EMH.
Ok, how can you disprove EMH without a profitable strategy? I'm aware of a few mathematical techniques for proving something exists without actually building it (probabilistic methods, baire category theorem), I can't see how any of them would apply.
Also, the statement that "X will go down but I don't know when" isn't really a prediction - it's more of a truism.
Your argument is more like a quack who prescribes magnetics for cancer.
When someone objects to the claim, quack say "well, prove your claim by showing you can heal the patient right now".
Taleb, Mandlebrot and a number of others have gone over the fallacious quality of EMH claims and it's been over a number of thread here, I don't have more time it now.
There's no need for EMH theories and graphs to get that.