The markets are efficient over time.
Sentiment: POSITIVE
I don't entirely reject the idea of efficient markets. It needs updating.
What's so seductive about the efficient markets hypothesis is that it applies nine years out of ten. A lot of the time it works. But when it stops working, you blow up.
Markets have built in inefficiencies, serious inefficiencies which are well known.
In markets, you have rich years, and you have less rich years.
You know what term you don't hear anymore? Arbitrage. The markets have gotten too efficient.
I've been through periods of stress, turbulence in the market for over the course of my career, various times, and never in any of those other periods have we had the advantage of a strong economy underpinning the markets.
If stability and efficiency required that there existed markets that extended infinitely far into the future - and these markets clearly did not exist - what assurance do we have of the stability and efficiency of the capitalist system?
I think businesses live longer that are on the stock market.
The market is incredibly inefficient and capable on rare occasions of being utterly dysfunctional. And people have a really hard time getting their brain around that fact. They want to believe that it's approximately efficient almost all the time, and it simply isn't true.
Markets are frequently ahead of, and often out of sync with, the economy.