MONEY CLASS OF THE DAY: Market Efficiency: You Come Into MYYYYY HOUSE?!
@denlillaapan explains market efficiency, the efficient market hypothesis, and the joint hypothesis problem.
5.8k sats \ 31 comments \ @denlillaapan
Very nice summary @k00b, (and it's lovely to see you work through it in real time). Just a slight adjustment: the two hypotheses advanced in the EMH/joint-hypothesis problem are:
Asset pricing model is correct
market efficiency.
...because, of course, what you're saying when you're saying that something is under-/overvalued is that the market isn't efficient, since it is mispricing this one thing.
edit: then I kept listening and you re-stated it that way. THANKS!
Very nice summary @k00b, (and it's lovely to see you work through it in real time). Just a slight adjustment: the two hypotheses advanced in the EMH/joint-hypothesis problem are:
...because, of course, what you're saying when you're saying that something is under-/overvalued is that the market isn't efficient, since it is mispricing this one thing.
edit: then I kept listening and you re-stated it that way. THANKS!