>--- Jon Johanning <jjohanning at igc.org> wrote:
>True in a sense, but it overlooks the point that,
>independently of all
>theories, shit happens: when, as Sam Johnson pointed
>out in arguing
>against Bishop Berkeley, your foot strikes the stone,
>the theory you
>were going on, that there wasn't a stone in your path,
>is rather
>seriously diminished in likelihood, to say the least.
>---
>
>Johnson didn't refute anything. He had the impression
>of a foot hitting a stone.
I always thought that was a pretty know-nothing, commonsensical (in the bad sense) example. Sort of like Larry Gatlin arguing for Bush's tax cuts on today's WSJ edit page by saying that he never got a job from a poor person. (Does he think that it's George Soros buying all his records?)
Efficient market theory makes a set of claims and predictions that have been repeatedly challenged by experience. Low valuation stocks outperform high valuation ones - but if the market were efficiently valuing firms, that shouldn't happen. Days before holidays are better for stocks than non-holiday-proximate days. Stock prices are more volatile than underlying profits or dividends. Etc. You don't need another theory to argue that those "anomalies" seriously undermine EM theory. You can, of course, incorporate them into another theory, like one based on mob psychology. But you don't need it.
Doug