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{{a|g|}}The [[efficient market hypothesis]], first formulated by Eugene Fama, states (broadly) that an investor cannot systematically beat the market because all important information is already priced into current share prices. This owes something to Adam | {{a|g|[[File:invisible bird.jpeg|450px|center|thumb|The invisible hand could not be reached for comment, yesterday.]]}}The [[efficient market hypothesis]], first formulated by Eugene Fama, states (broadly) that an investor cannot systematically beat the market because all important information is already priced into current share prices. This owes something to {{author|Adam Smith}}’s invisible hand and the wisdom of the crowd: the infinite nudges and impulses of all investors in the market who, between them, necessarily have more information in aggregate than you do, nudge asset prices to the “correct” or “optimal” point, and anyone valuing an asset with with poor information will instantly be picked off by a better-informed ''arbitrageur''. | ||
Therefore, stocks ''already'', always trade at the fairest value, meaning that anyone who ''does'' beat the market basically flukes it. | |||
The [[JC]] has spotted a variation of [[EMH]] in the legal world | Statistical arbitrageurs, value investors like Warren Buffett and {{author|Edward Thorp}}, [[Behavioural psychology|behavioural psychologists]] and, most recently, a bunch of day-traders on [[GameStop|Reddit]], have begged to differ. The gist of their arguments: “the market can stay irrational longer than you can stay solvent” | ||
The [[JC]] has spotted a variation of [[EMH]] in the legal world: {{efficient language hypothesis capsule}} | |||
Oddly, this seems to be taking longer to happen than anyone expected. | Oddly, this seems to be taking longer to happen than anyone expected. |