Tag Archive: Eugene Fama


It’s always difficult to post the latest event and findings, just to put it in prospective. Is there anything in the Indian papers worth blogreading today? Or shall wait 4 the outrage to surface it?

Sharing two of the contrary indicators and psychology of Efficient Market Hypothesis and Black Swan that I have taken from the reformed broker and Hedgeye blog.

Sometimes it can be the Black duck

 “The trouble with the Recency Effect is that everyone all of a sudden thought they were Nassim Taleb, ornithological experts on the spotting of Black Swans. Every blip on the screen or blurb in the newspaper was fresh evidence of the next hundred years’ storm. Forget being fooled by randomness, people have become obsessed with randomness. Continue reading

It’s always difficult to post the latest event and findings,just to put it in prospective. Is there anything in the Indian papers worth reading today? imagesOr shall wait 4 the outrage to surface it?

Sharing two of the contrary indicators and psychology of Efficient Market Hypothesis and Black Swan, that I have taken from The reformed broker and Hedgeye blog.

Sometimes it can be the Black duck

“The trouble with the Recency Effect is that everyone all of a sudden thought they were Nassim Taleb, orinthological experts on the spotting of Black Swans. Every blip on the screen or blurb in the newspaper was fresh evidence of the next hundred years’ storm. Forget being fooled by randomness, people have become obsessed with randomness.  Continue reading

Investment Fashions

Sharing one of the extract that I liked in Traders Guns and Money – From the Investment bankers prospective all clients are real arseholes but imagesinvestors are real arseholes. If the buy side say F*** you, before they hang up, investors also say F*** you when they pick up the phone. Here are some key principles for fund management:

1) Diversification: Harry Markowitz proved that putting all your eggs in one basket was risky. Warren buffet continues to defy this successfully. He argues you are better off putting your money into a few things you know and understand, and that are cheap. He doesn’t like the thought of buying all the stuff you know nothing about.  Continue reading

John C. Bogle the renowned name in the mutual funds shared some thoughts long back saying Whatever the form of theA EMH, I know of no serious academic, professional money manager, trained security analyst, or intelligent individual investor who would disagree with the thrust of EMH: The stock market itself is a demanding taskmaster. It sets a high hurdle that few investors can leap.

University of Chicago Professor Eugene F. Fama had performed enough analysis of the ever-increasing volume of stock price data to validate this “random walk” hypothesis, rechristened as the efficient market hypothesis (EMH). Today, the intellectual arguments against the EMH religion are few. The church, however, has three different dogmas. Princeton Professor Burton Malkiel describes them: the weak form (stock price changes over time are statistically independent); the semi-strong form (prices quickly reflect new value-changing information); and the strong form (professional managers are unable to accurately forecast the future prices of individual stocks). Continue reading

EFFICIENT MARKET HYPOTHESIS

I dare to write on this topic as it is the most intense and debatable topic in the financial markets over the years.

As recently the author of “Fooled by Randomness” and “The Black SwanNassim Taleb became the anti-theorist in finance arguing that the Nobel committee should be sued for awarding Harry Markowitz, Bill Sharpe and Merton Miller http://www.bloomberg.com/news/2010-10-08/taleb-says-crisis-makes-nobel-panel-liable-for-legitimizing-economists.html

But the Continue reading

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