Nobel Needs Grounding in Reality-Based Economics
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The Flat Earth Society has all but disappeared, but the efficient-market hypothesis is alive and well. This week, the Nobel Memorial Prize in Economic Sciences was awarded to its most tenacious advocate, Eugene F. Fama of the University of Chicago.
The hypothesis posits that the stock market is an “efficient” calculating machine, and that stock prices are rational computations of observable facts. It follows that future prices are unpredictable.