[lbo-talk] Reflections on the Efficient Market Hypothesis

[Mark S]

[Only five of 140 equity mutual funds in existence since 1970 have 
outperformed the market by more than 2% over that period.  (p. 4)  And those 
are only the survivors!]

Reflections on the Efficient Market
Hypothesis: 30 Years Later
Burton G. Malkiel∗
Princeton University

ABSTRACT

In recent years financial economists have increasingly questioned the 
efficient market
hypothesis. But surely if market prices were often irrational and if market 
returns were as
predictable as some critics have claimed, then professionally managed 
investment funds should
easily be able to outdistance a passive index fund. This paper shows that 
professional investment
managers, both in the U.S. and abroad, do not outperform their index 
benchmarks and provides
evidence that by and large market prices do seem to reflect all available 
information.

http://www.thefinancialreview.org/Malkiel%20Reflections%20EFA%202004.pdf

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