Market Efficiency vs. Behavorial Finance: Difference between revisions
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==Market Efficiency== | ==Market Efficiency== | ||
*Market Efficieny says that the market occasionally gets things wrong, but it is 90% efficient. | |||
*Something may be statistically significant but not economically significant, so you cannot profit off the information. | |||
*There are a handful of funds that outperform a broad index of stock, however, there is no way to tell in advance which ones these are going to be. | |||
==Behavioral Finance== | |||
*Dick Thaler, a behavioralist at the University of Chicago, believes that markets could be 90% inefficient. | |||
Revision as of 23:25, 30 April 2007
Market Efficiency
- Market Efficieny says that the market occasionally gets things wrong, but it is 90% efficient.
- Something may be statistically significant but not economically significant, so you cannot profit off the information.
- There are a handful of funds that outperform a broad index of stock, however, there is no way to tell in advance which ones these are going to be.
Behavioral Finance
- Dick Thaler, a behavioralist at the University of Chicago, believes that markets could be 90% inefficient.
