View Full Version : Efficient Market Hypothesis

06-28-2008, 10:56 AM
Anyone interested in portfolio theory and efficient market hypothesis as per Eugene Farma and others?

Oh GAWD the Smell!
06-29-2008, 01:59 AM


Capable of understanding?

Probably not.

But that's why I pay (probably through the nose) for others to manage it for me.

06-29-2008, 04:59 AM
The principles seem pretty simple actually and have been known for a long while. Farma's dissertation was published in 1965 and concluded that stock price movements are unpredictable and random.

Given what I read in the papers and hear on TV there must be a very large number of people in the financial markets who disagree with the premise however.

The efficient market hypothesis is that the stock markets already reflect all information that is possible to know.

I have never been much interested in investing and finance as it seems so tedious to me. But this idea I find rather intriguing.

08-14-2008, 03:40 PM
I am a financial advisor and we run our portfolios based on the large amount of research done by Fama and French. If you would like to be able to read more about them, go to http Dimensional Fund Advisors: DFA Home (, which is an institutional fund company that we use and is ran on his research. (he is actually a consultant and board member for them)

I have met Fama and been through his presentations, which are essentially a one week Phd crash course. He, obviously, is very intelligent and passionate about his nobel prize winning research. He even talks about how he has improved on it and how part of it was wrong.

It is amazing that investors can use this model and pay about 75% less in fees and outperform 90+% of the funds, yet now one knows about it. Why? Because it does not sell and create commissions.