Emphases are all mine.
"The question is not whether the EMH is “true,” how could it be? Almost no economic model is precisely true. The question is whether it is useful. I find the EMH useful, and anti-EMH models to be almost completely worthless. I’m still looking for the model that will tell me how to beat the stock market. Just when I was starting to warm up to Shiller’s model, he missed the huge bull market of 2009-11." - Scott Sumner
"Problems of capitalism are not justification for post-capitalist utopia.And problems of government are not justification for any anarchist worker's paradise." - Prateek Sanjay
"This is a great division between academics and--let's call them journamalists. Academics think that their arguments are stronger and thus that they are stronger and more persuasive when they cite and link. Journamalists think that if they give their readers a whisper that there are other, perhaps better sources of information, then--OH NOES!! THE REEDRS GO READ SOMETHING ELSE!! TEHRE GOEZ R ADVERTIZING REVENUE!! This makes academics think that journamalists are immoral, mannerless cads--the type of people who you invite to dinner who then urinate on your bedspread. Journamalists, by contrast, are puzzled: "What's the big deal?" they ask. "Everybody does it."" - Brad DeLong
And perhaps the wisest thing I've read in the last twenty-four hours:
"I decided to expand my “library”" - Jonathan Catalan
This makes academics think that journamalists are immoral, mannerless cads...--Brad DeLong
ReplyDeleteYou could bake a cake with that irony.
I have corresponded with Scott Sumner regarding the Efficient Markets Hypothesis and the econophysics project. He told me that he doesn't see why the EMH has to follow the Gaussian distribution, when many people in orthodox finance use the said distribution as a tool of convenience!
ReplyDeleteThis is a problem. The Efficient Markets Hypothesis is badly flawed due to the fact that financial time series data is better represented by the Cauchy distribution rather than the Gaussian distribution. The use of the Gaussian distribution implies that financial markets are perfectly stable, when this is NOT the case!
See this paper by Joseph L. McCauley explaining why the EMH (with its use of the Gaussian distribution) is flawed and how Martingales and Hurst exponents help describe the financial market as it actually is!
http://www.unifr.ch/econophysics/articoli/Ancona.pdf
Hurray for recognitions.
ReplyDeleteI liked Scott Sumner's statement.
Blue Aurora.
ReplyDeletePlease show me your yacht. I assume you own a yacht, you have to to be in this discussion :)
No, I don't own a yacht. What is the meaning of that figure of speech you're trying to convey, Current?
ReplyDeleteWhat the EMH is intended to convey is the idea that the bystanders in capital markets are not likely to make better judgements than the big players in those markets. To disapprove of the EMH is to say that you can price capital better than the markets can. In that case you can make a lot of money.
DeleteSo, make a few billion first. Then invite me to your yacht and tell me why the EMH is wrong.
'The question is not whether the EMH is “true,” how could it be? Almost no economic model is precisely true. The question is whether it is useful. I find the EMH useful, and anti-EMH models to be almost completely worthless. I’m still looking for the model that will tell me how to beat the stock market. Just when I was starting to warm up to Shiller’s model, he missed the huge bull market of 2009-11.'
ReplyDeleteHow is it useful if it didn't see the crisis coming ?????
I need to coin a term for this, where economists acknowledge a model is wrong but cling to it anyway.
Shiller's model is anti-EMH!
DeleteI don't know enough to arbitrate the EMH issues, and I think a lot of people blow its claims out of proportion (much like they do when talking about "rationality" in economics).
I mostly like his standards for judging the theory.
From what I know about the EMH, it simply *must* be opposed to Knightian uncertainty, which automatically falsifies it IMO.
DeleteThe EMH means you'd never find a bargain stock on the NYSE because so many people have examined them there's no way you would find an undervalued one. You'd have to be a sucker to---oh. Never mind.
DeleteIB
Unlearningecon, have you ever read my article on why economists are hilarious? I think you'll like it.
ReplyDeleteBrilliant, and I particularly liked the Easterly quote at the bottom. The Eugene Fama interview - where he insists that the word 'bubble' is meaningless - is equally funny.
Delete* g o a t s e x * g o a t s e x * g o a t s e x *
ReplyDeleteg g
o / \ \ / \ o
a| | \ | | a
t| `. | | : t
s` | | \| | s
e \ | / / \\\ --__ \\ : e
x \ \/ _--~~ ~--__| \ | x
* \ \_-~ ~-_\ | *
g \_ \ _.--------.______\| | g
o \ \______// _ ___ _ (_(__> \ | o
a \ . C ___) ______ (_(____> | / a
t /\ | C ____)/ \ (_____> |_/ t
s / /\| C_____) | (___> / \ s
e | ( _C_____)\______/ // _/ / \ e
x | \ |__ \\_________// (__/ | x
* | \ \____) `---- --' | *
g | \_ ___\ /_ _/ | g
o | / | | \ | o
a | | / \ \ | a
t | / / | | \ |t
s | / / \__/\___/ | |s
e | / | | | |e
x | | | | | |x
* g o a t s e x * g o a t s e x * g o a t s e x *
＿ ＿
ReplyDelete／::. ｿ .::;;ヽ
/::. ..:::;;;ヽ
/::. ..::;;;;ヽ
/::. ..::::;;;;i
（::. ..::;;;丿
>::...＿＿＿..::::;;;イ
!ヾ.￣⌒_＿￣彡|
iﾐ:::ミＣ＝ ≡..::: ）
|:::: ″. ´/
|::::: ヽ / /;|
|::: （ ' （ .::;;;|
|::: | ﾐ .ヽ＼|
|::: 丶ヽ ..:ヽ ）
|::: .i ! ::;;;;;|
|::: i .ﾉ . ::;;;;;|
|::: i .ﾉ . ::;;;;;|
|::: i .ﾉ . ::;;;;;|
|::: （ ヽ ..::;;;;;|
（ ＼ l. | ..:;;;;;;|
|::＼∨丿 ″..:;;;;;|
|::: （ ( ﾞ ..:;;;;;|
.彡.|::: | ! .....:::;;;;;|ゞ巛ミ
巛从ﾐ彡ミ彡从巛彡ミ彡ﾐ彡》》
巛巛ミ人ﾐ彡巛彡从ミ巛ミ人ﾐ》》》》
巛彡巛彡从ミ》彡彡巛ミ人ﾐ彡ミ从》》
Um, is that what I think it is? ^
DeleteYeah, it's spam.
DeleteIt's Flo Jetz, get it right. And, I was talking about the fact that it is shaped like a particular part of the male anatomy.
DeleteRight...Speaking of libraries, the introduction to Report from a Chinese Village by Jan Myrdal has a lot of interesting, quotable things in its introduction. Myrdal is called a leftist (Wikipedia, for example, calls the Report "uncritical," but I've spotted a few things which are clearly criticisms waiting to be stated) but in many ways he sounds like a social libertarian, especially in his peasant's populism and distrust of officialdom.
ReplyDeleteHaven't read through the book yet - working on it.