[lbo-talk] Are markets 'efficient' or irrational?

[Wojtek S]

So the market is always right. Or is it? A decade later, a challenger to
the efficient markets hypothesis arrives on the scene - Robert Shiller, now
at Yale, then at MIT.

He wrote a paper making a statistical case that market volatility is too
high for the efficient markets theory to be true. His idea was that markets
have a tendency to overreact to news, or to react to non-news.

"This got me into a huge controversy then," he recalls. "I was wondering
why do people get so emotional about this? I'm just saying something that's
common sense and obvious - these markets aren't perfect."

http://www.bbc.co.uk/news/magazine-24579616

[WS:]  What I find interesting about this subject is that apparently in
economic facts are irrelevant until validated by The Theory.  This is
theology.
-- 
Wojtek

"An anarchist is a neoliberal without money."