Defending EMH

In today’s Wall Street Journal, Jeremy J. Siegel comes to the defense of the Efficient Market Hypothesis. I agree that blaming EMH for the credit crisis a stretch. There’s a lot wrong with EMH, but I don’t think we can hang our current mess on it.
I’m still skeptical that the government can and should act to break investment bubbles. My issue isn’t EMH-centered, that prices are always right. Instead, I just don’t trust the government nor am I convinced that a burst bubble is for the general good. As Daniel Gross has pointed out, bubbles can be very good things.
This one time, let’s leave EMH alone. To me, the real mystery around EMH isn’t whether it’s true or not, but how could anyone have ever believed it?

Posted by on October 28th, 2009 at 9:39 am

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