Skip to main content
No. of Recommendations: 4
My response to the Efficient Market Hypothsis (EMH) is generally favorable, especially as a justification for diversification and a broad asset allocation stategy. But David Dreman's running critique of EMH in his Contrarian Investment Strategies, the Next Generation has certainly caused me to take a more skeptical view.

A couple days ago I ran across a web article that gives an excellent (if somewhat academic) overview of EMH and its critics. See the abstract and link below:

Abstract: The hitherto dominant paradigm in financial market research, the Efficient Market Hypothesis (EMH), has been put on trial recently and subjected to critical re-examination. The preliminary evidence indicates that the initial confidence in the Efficient Market Hypothesis might have been misplaced. It is observed that financial equilibrium models based on EMH fail to depict trading operations in the real world. Various anomalies and inconsistent results call for refinement of the existing paradigm. It is proposed in this article that a more coherent theory of stock market behavior can be developed by incorporating Keynesian ideologies on the speculative behavior of investors.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.