My former professor at the University of Chicago was awarded the Nobel prize in economics yesterday morning……
Eugene Fama is the godfather of efficient market theory…..The significant majority of his work was authored while teaching at the U. of C. He still teaches there and was probably warmly greeted by his class when he arrived for his lecture today……
Most have never heard of him but he is truly one of the high priests in finance…Wall Street, for the most part, has diligently marketed to dismiss his findings because he essentially recommends (and his regressions strongly provide evidence) that it’s best to “be the ball, Danny” – just index and in the long-run you’ll beat professional stock-pickers…..
In addition, the consequences of markets being, if not perfectly efficient, then pretty darn close are quite incredible (market efficiency is impossible to prove or disprove because of the joint-hypothesis conundrum)….I won’t get into the consequences for not only finance but, more broadly, social policy (think Heisenberg uncertainty principle for aggregate Human interaction) but let’s just say his research has spawned spirited enemies. Besides Wall Street disliking his work, “gentlemen” like Paul Krugman actually view him as a nemesis to their ideology…..
Krugman refers to people like Fama, Coase, Hayek, and Friedman (all Nobel prize winners) as “fresh water” economists….I assume it’s a reference to them all hailing from the University of Chicago – the high temple of economics….And the only beacon of light for navigating toward the true understanding of how best society should govern herself….
Anyway, I thought it should be noted on the JERKSTORE…….