The efficient market hypothesis claimed that, over time, investors couldn't beat the market...that it was smarter than investors. And yes, Warren Buffett chuckles at this notion, because he slaughtered it for half a century. He is wealthy, and Andrew Lo, the MIT professor who posited this theory in 2004, is not. But just to humor the position, the adaptive market hypothesis is cattle rope, trying to bring the efficient market theory together with various models of irrational behavior in the stock market. It's kind of a Darwinian approach to the way in which the stock market works, relying largely on psychology striating the food chain for who does what to whom, in a kind of unholy wrestling match between greed and fear, where fraudulent behavior is the referee.
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Finance: What is Alpha?11 Views
Finance allah shmoop what is alfa All right well you've
heard of the alfa dog the alfa male an alfa
bet soup investing alfa is good when you have a
lot of it If your index iii the set of
investment returns numbers you were being measured against was saying
the s and p five hundred and it went up
eleven percent last year and you ve a trading or
investing in stocks and maybe options and whatever other vehicles
you deployed like dead and you know leverage and you
were on lee up eight percent last year Well then
you had low alfa sorry just keeping it real You
actually destroyed value after all your hard work from that
year you could have done nothing I he just let
your money sick and an s and p five hundred
index fund played golf all day and night If you
you know had those glow in the dark ball thing
is and you would have done three hundred basis points
better than you did trying teo you know outsmart mr
market So hi alfa Good low alfa bad unlike your
depressing golf score ask sophie if you need some help 00:01:09.415 --> [endTime] Home
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