MBA finance…

Brown’s viewpoint also ignores the role the EMH plays in a long litany of “derivative” ideas, by which I mean the theories that are based upon the flawed assumptions and recommendations of the EMH. This long and dire list includes the Capital Asset Price Model (CAPM), the Black-Scholes option pricing model, modern risk management techniques (which use market inputs as the best estimators of the future as per the EMH), the whole madness of mark-to-market accounting, market cap indexing, the Modigliani and Miller dividend and capital structure irrelevance propositions, the shareholder value concept, and even the Fed, which stood back and thought that the market knew best.

Was It All Just A Bad Dream? Or, Ten Lessons Not Learnt – James Montier, GMO White Paper, February 2010

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